Leveraged: meaning, definitions and examples

financial context

Leveraged refers to the use of various financial instruments or borrowed capital—in other words, debt—to increase the potential return of an investment. This term is often used in the context of finance and investing, where it indicates that the investment has been funded in part by borrowing. Higher leverage can amplify both potential gains and potential losses. In business, leveraged operations can mean using leverage to optimize asset utilization, resulting in increased profit margins. However, excessive leverage can lead to higher risk, and a company should balance its leverage to avoid financial distress.

debt-using, financed, geared

Examples of usage

• The company used leveraged buyouts to acquire its competitor.

• Investors often seek leveraged investments to maximize their returns.

• A leveraged position can result in substantial losses if the market moves against you.