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Leverage vs Overleverage - What's the difference?

leverage | overleverage |

In finance terms the difference between leverage and overleverage

is that leverage is the use of borrowed funds with a contractually determined return to increase the ability of a business to invest and earn an expected higher return, but usually at high risk while overleverage is to leverage excessively.

As nouns the difference between leverage and overleverage

is that leverage is a force compounded by means of a lever rotating around a pivot; see torque while overleverage is excessive leverage.

As verbs the difference between leverage and overleverage

is that leverage is to use; to exploit; to take full advantage (of something) while overleverage is to leverage excessively.

leverage

English

Noun

(en-noun)
  • A force compounded by means of a lever rotating around a pivot; see torque.
    • A crowbar uses leverage to pry nails out of wood.
  • By extension, any influence which is compounded or used to gain an advantage.
    • Try using competitors’ prices for leverage in the negotiation.
  • (finance) The use of borrowed funds with a contractually determined return to increase the ability of a business to invest and earn an expected higher return, but usually at high risk.
    • Leverage is great until something goes wrong with your investments and you still have to pay your debts.
  • *
  • (business) The ability to earn very high returns when operating at high capacity utilization of a facility.
    • Their variable-cost-reducing investments have dramatically increased their leverage .
  • * {{quote-news
    • , year=2011 , date=April 15 , author=Saj Chowdhury , title=Norwich 2 - 1 Nott'm Forest , work=BBC Sport citation , page= , passage=The former Forest man, who passed a late fitness test, appeared to use Guy Moussi for leverage before nodding in David Fox's free-kick at the far post - his 22nd goal of the season.}}

    Synonyms

    * (force compounded by a lever) mechanical advantage * (use of borrowed fund) financial leverage * (ability to earn high returns from high capacity utilization) operating leverage

    Verb

    (leverag)
  • (transitive, chiefly, US, slang, business) To use; to exploit; to take full advantage (of something).

    • Derived terms

    * leveraged buyout

    Synonyms

    * (take full advantage of) exploit, use

    overleverage

    English

    Noun

    (-)
  • Excessive leverage.

    • Verb

    (overleverag)
  • (finance) To leverage excessively
    • The company was severely overleveraged .
  • *{{quote-news, 2009, January 20, John Collins Rudolf, Banks Foreclose on Builders With Perfect Records, New York Times citation
    • , passage=“Yes, there was overleveraging in the industry. }}