Leverage
Plain-English definition
The use of debt to finance assets alongside equity.
Why it matters
Borrowing can amplify both gains and losses and creates interest and repayment obligations.
Example
A hypothetical company funds $150 of assets with $50 debt and $100 equity. A $15 asset loss reduces equity to $85 if debt is unchanged.
How income investors use it
State the ratio definition and distinguish a company's borrowing from an investor's brokerage margin. REIT and BDC structures require context.
This material is general education, not individualized investment, tax, or legal advice.