LEVERAGE Definition

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LEVERAGE is property rising or falling at a proportionally greater amount than comparable investments. For example, an option is said to have high leverage relative to the underlying stock because a price change in the stock may result in a relatively large increase or decrease in the value of the option. In general, in finance, leverage is the use of debt financing. Leverage, within a corporation, is the use of borrowed money to increase the return on investment. For leverage to be positive, the rate of return on the investment must be higher than the cost of the money borrowed.

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DEFICIT is a debit balance in the Retained Earnings account resulting from accumulated losses.

ACCOUNTANTS OPINION is a signed statement regarding the financial status of an entity from an independent public accountant after examination of that entities records and accounts.

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