- leverage
- The ability to control large dollar amounts of a commodity with a comparatively small amount of capital. Chicago Board of Trade glossary————The control of a larger sum of money with a smaller amount. By accepting the liability to purchase or deliver the total value of a futures contract, a smaller sum ( margin) may be used as earnest money to guarantee performance. If prices move favorably, a large return on the margin can be earned from the leverage. Conversely, a loss can also be large, relative to the margin, due to the leverage. The CENTER ONLINE Futures Glossary————The amount of the owners' or stockholders' money relative to the money that lenders, suppliers and others have contributed to the firm. The ratio of owners' money to other peoples' money. American Banker Glossary————The use of debt financing, or property of rising or falling at a proportionally greater amount than comparable investments. For example, an option is said to have high leverage compared to the underlying stock because a given price change in the stock may result in a greater increase or decrease in the value of the option. Also, commonly known as Gearing in Europe. Bloomberg Financial Dictionary————The use of a small quantity of assets to control a greater quantity of assets; for example, in futures, relatively little capital, usually 5% to 15% of the total value of the contract, gives the trader the benefit of price movement on the full contract. The downside is that if the price moves adversely, the leverage will work against the trader. Chicago Mercantile Exchange Glossary————See gearing. Dresdner Kleinwort Wasserstein financial glossary————The ability to control large amounts of a financial asset with a comparatively small amount of capital. Exchange Handbook Glossary————Term for gearing in the U.S., the ratio of a company's debts to its assets. Financial Services Glossary————see gearing London Stock Exchange Glossary————Possibility to purchase shares and other types of investment product in an amount higher than the invested capital. NYSE Euronext Glossary
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▪ I. leverage le‧ver‧age 1 [ˈliːvrɪdʒ ǁ ˈle-, ˈliː-] noun [uncountable]1. the influence that one person or organization has on another:• It uses its considerable economic leverage to influence other nations.
2. FINANCE the amount of borrowing that a company has in relation to its share capital (= the money it has from selling its shares ) . If the company makes more profit by investing this borrowed money in its business activities than it pays in interest, the company's shareholders will obtain higher payments from their shares. But if the company makes less profit than it pays in interest, shareholders will receive less money:• The company has reduced its leverage , primarily through asset sales.
• a warning to investors about the risks of high leverage
• Heavy leverage and aggressive expansion made for a weak balance sheet.
ˈdebt ˌleverage FINANCEanother name for leverage:• Reducing capital spending should allow the company to reduce its debt leverage to about 40%.
fiˌnancial ˈleverage FINANCEanother name for leverage:• Given the company's strong earnings and cash flow, it is likely that lower financial leverage will be quickly restored.
ˈloan ˌleverage FINANCEthe amount that a bank has lent in relation to its share capital:• In 1945, the American banking system had a loan leverage ratio of 2.8. In other words, banks had only $2.80 in loans for each dollar of equity.
— see also debt-equity ratioto use borrowed money to buy a particular company or investment:• Their capacity to leverage private capital in support of these projects has been variable.
— leveraging noun [uncountable] :• Leveraging can double your return.
leverage something → up phrasal verb [intransitive, transitive]if a company leverages up, or if the management leverages it up, the amount of borrowing it has is increased:• American and Delta have kept their debt levels low while other airlines leveraged up.
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► See Gearing.* * *
Ⅰ.leverage UK US /ˈliːvərɪdʒ/ US /ˈlevərɪdʒ/ noun [U]► the power to influence people and get the results you want: »This gives advertisers more leverage when it comes time to negotiate rates.
»Campaigners are trying to get as much political leverage on the situation as possible.
»States do not have the economic leverage to influence a foreign country.
»Labor experts say a service economy can give leverage to unionized workers.
► FINANCE the relationship between the amount of money that a company owes and its share capital or value: »The company plans to reduce the leverage to between 40% and 60% by the year end.
»The bank was asked to improve its capitalization and reduce its leverage.
»The figure shows that they had high growth rates of bank lending and high leverage.
»Even if banks were able to rush back into heavy leverage soon, investors wouldn't stand for it.
► FINANCE the act of using borrowed money to buy an investment or a company: »With leverage, the investor's $100,000 buys $500,000 or more of stock if he wants.
→ See also DEBT LEVERAGE(Cf. ↑debt leverage), FINANCIAL LEVERAGE(Cf. ↑financial leverage), LOAN LEVERAGE(Cf. ↑loan leverage)Ⅱ.leverage UK US /ˈliːvərɪdʒ/ US /ˈlevərɪdʒ/ verb [T]► to use something that you already have, such as a resource, in order to achieve something new or better: »This new strategy is about leveraging the relationships we have with our customers.
leverage sth into sth »If you enjoy the work, it should be possible to leverage your temporary assignment into a full-time job.
► FINANCE to use borrowed money to buy an investment or a company: »The money could be used to leverage millions of additional dollars.
leveraging noun [U]► FINANCE »Through aggressive leveraging, it grew into one of the largest private enterprises in the country.
Financial and business terms. 2012.
