what is financial leverage 
financial leverage is the concept of using borrowed capital as a funding source leverage is often used when businesses invest in themselves for expansions acquisitions or other growth methods leverage is also an investment strategy that uses borrowed money specifically the use of various financial instruments or borrowed capital to increase the potential return of an investment investopedia lara antalunderstanding financial leverageleverage is using debt or borrowed capital to undertake an investment or project it is commonly used to boost an entity s equity base the concept of leverage is used by both investors and companies investors who are not comfortable using leverage directly have a variety of ways to access leverage indirectly they can invest in companies that use leverage in the ordinary course of their business to finance or expand operations without increasing their outlay the point and result of financial leverage is to multiply the potential returns from a project at the same time leverage will also multiply the potential downside risk in case the investment does not pan out when one refers to a company property or investment as highly leveraged it means that the item has more debt than equity 