▁le verage ▁ra ises ▁a ▁company ' s ▁dependence ▁on ▁its ▁credit ors ' ▁willing ness ▁and ▁ability ▁to ▁fund ▁its ▁balance ▁sheet . ▁Le verage ▁can ▁also ▁ampl ify ▁the ▁impact ▁of ▁a ▁company ' s ▁dist ress ▁on ▁other ▁companies , ▁both ▁directly , ▁by ▁increasing ▁the ▁amount ▁of ▁expos ure ▁that ▁other ▁fir ms ▁have ▁to ▁the ▁company , ▁and ▁indirect ly , ▁by ▁increasing ▁the ▁size ▁of ▁any ▁asset ▁liquid ation ▁that ▁the ▁company ▁is ▁forced ▁to ▁undert ake ▁as ▁it ▁comes ▁under ▁financial ▁pressure . ▁Le verage ▁can ▁be ▁measured ▁by ▁the ▁ratio ▁of ▁assets ▁to ▁capital , ▁but ▁it ▁can ▁also ▁be ▁defined ▁in ▁terms ▁of ▁risk , ▁as ▁a ▁measure ▁of ▁economic ▁risk ▁relative ▁to ▁capital . ▁The ▁latter ▁measurement ▁can ▁better ▁capture ▁the ▁effect ▁of ▁derivatives ▁and ▁other ▁products ▁with ▁embedded ▁le verage ▁on ▁the ▁risk ▁undert aken ▁by ▁a ▁non bank ▁financial ▁company . L iqu id ity ▁risk ▁and ▁m atur ity ▁mismatch L iqu id ity ▁risk ▁generally ▁refers ▁to ▁the ▁risk ▁that ▁a ▁company ▁may ▁not ▁have ▁sufficient ▁fund ing ▁to ▁satisfy ▁its ▁short - term ▁needs , ▁either ▁through ▁its ▁c ash ▁flows , ▁m aturing ▁assets , ▁or ▁assets ▁sal able ▁at ▁prices ▁equivalent ▁to ▁book ▁value , ▁or ▁through ▁its ▁ability ▁to ▁access ▁fund ing ▁mark ets . ▁For ▁example , ▁if ▁a ▁company ▁holds ▁assets ▁that ▁are ▁ill iqu id ▁or ▁that ▁are ▁subject ▁to ▁significant ▁decre ases ▁in ▁market ▁value ▁during ▁times ▁of ▁market ▁stress ,