le·ver·age | \ˈle-və-rij, ˈlē-;ˈlev-rij, ˈlēv-\

Definition of leverage 

(Entry 1 of 2)

1 : the action of a lever or the mechanical advantage gained by it

2 : power, effectiveness trying to gain more political leverage

3 : the use of credit to enhance one's speculative capacity


leveraged; leveraging

Definition of leverage (Entry 2 of 2)

transitive verb

1 : to provide (something, such as a corporation) or supplement (something, such as money) with leverage also : to enhance as if by supplying with financial leverage

2 : to use for gain : exploit shamelessly leverage the system to their advantage— Alexander Wolff

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Examples of leverage in a Sentence


The union's size gave it leverage in the labor contract negotiations. The player's popularity has given him a great deal of leverage with the owners of the team. I used the leverage of the bar and a wooden block to pry the rock out of the hole.


The company wants to leverage its brands more effectively. a reality show contestant who's trying to leverage her 15 minutes of fame
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Recent Examples on the Web: Noun

Officials in the administration argue that its policies give Trump leverage over Putin. BostonGlobe.com, "Crossed signals on Russia show Trump untethered from advisers," 14 July 2018 During the Soviet era, Russian intelligence cast a wide net to gain leverage over influential figures abroad. Jonathan Chait, Daily Intelligencer, "Will Trump Be Meeting With His Counterpart — Or His Handler?," 8 July 2018 So, the majority of those who are not are here on H-1Bs and have very little market leverage. Recode Staff, Recode, "Full transcript: Fog Creek Software CEO Anil Dash answers all the questions on Too Embarrassed to Ask," 8 July 2018 China has leverage over key exports from U.S. states that voted for Trump in 2016. Fortune, "Next Move Is Trump's After China Hits Back in Trade-War Opener," 16 June 2018 Leon ruled that the DOJ had failed to prove that the combined company would have more leverage in negotiations, and that there was insufficient evidence to suggest that AT&T would have the incentive to stop licensing Time Warner to its rivals. Klint Finley, WIRED, "The AT&T-Time Warner Merger Is a Done Deal. Now What?," 12 June 2018 In the realm of international relations, Hadley and others said, Trump often creates crises as a way of gaining leverage over others. Karen Deyoung, Anchorage Daily News, "In Trump, some see the end of the world order," 8 June 2018 Led by César Chávez and Dolores Huerta, farmworkers sought more rights and hoped to gain leverage by winning public support of grape and wine boycotts. Alice George, Smithsonian, "On the Eve of his Death, Robert Kennedy Was a Whirlwind of Empathy and Internal Strife," 7 June 2018 Analysts said North Korea's threat to scuttle the summit is likely an attempt to gain leverage over Washington, which has demanded the North immediately and irreversibly cease its nuclear weapons program. Christopher Bodeen, The Christian Science Monitor, "China steps in to urge North Korea to go through with US summit," 16 May 2018

Recent Examples on the Web: Verb

And now, the AMD licensing deal—which leverages both a licensing deal and a joint venture to allow the use of x86 intellectual property—is delivering what could be the first step toward a domestic high-performance server platform. Sean Gallagher, Ars Technica, "China producing x86 chips nearly identical to AMD server processors," 9 July 2018 Along with Leslie Caron and her onetime rival, Zizi Jeanmaire, Ms. Montevecchi was part of a generation of performers who leveraged ballet success in France into wider popularity. Harrison Smith, Washington Post, "Liliane Montevecchi, French cabaret star who won a Tony for ‘Nine,’ dies at 85," 1 July 2018 Linh is part of an ever-growing class of people who have leveraged their social media clout to travel the world, frequently in luxury. Taylor Lorenz, The Atlantic, "Instagram Influencers Are Driving Luxury Hotels Crazy," 13 June 2018 But in the face of more billion-dollar disasters, leveraging the resources and influences that all sectors have on our society is the only sustainable way forward. Jeff Schlegelmilch, Fortune, "The 2018 Hurricane Season Is Here. We Can’t Just Rely on the Federal Government to Help Us Prepare," 30 May 2018 Meanwhile, the deal gives a large platform to the Obama Foundation, which could leverage the approximately 125 million Netflix subscribers around the world to further its social causes. The Washington Post, NOLA.com, "Barack and Michelle Obama going into the Netflix business, signing multi-year production deal," 22 May 2018 The 30-year-old Pennsport resident is a coach and saleswoman with Beachbody, a national company that uses independent contractors who leverage social media to sell fitness and nutrition programming like P90X, Insanity and 21-Day Fix. Anna Orso, Philly.com, "Behind those before-and-after Instagram photos: Money, marketing and meal replacements," 21 May 2018 All in a day’s work for women like Song; women who have leveraged their own brand—i.e., themselves—and turned photos of their outfits into thriving, modern, very lucrative businesses. Samantha Leach, Glamour, "After Almost a Decade, Aimee Song's Influence Is More Bankable Than Ever," 25 Apr. 2018 All lender and title closing documents were executed electronically leveraging the Notarize Closing portal. Houston Chronicle, "Stewart completes its first fully digital online closing in Texas," 8 July 2018

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'leverage.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

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First Known Use of leverage


1830, in the meaning defined at sense 1


1957, in the meaning defined at sense 1

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Phrases Related to leverage

leveraged buyout

Statistics for leverage

Last Updated

17 Oct 2018

Look-up Popularity

Time Traveler for leverage

The first known use of leverage was in 1830

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More Definitions for leverage



Financial Definition of leverage

What It Is

Leverage is any technique that amplifies investor profits or losses. It's most commonly used to describe the use of borrowed money to magnify profit potential (financial leverage), but it can also describe the use of fixed assets to achieve the same goal (operating leverage).

How It Works

Financial Leverage

Let's look at selected balance sheet and income statement information for Company XYZ.

Company XYZ has invented a new product that will revolutionize the widget market, but it needs to build a new $1,000,000 factory. It must choose between using equity or long-term debt to build the factory. We can see the impact on profits of both decisions.

Scenario A: Raise $1,000,000 by issuing new stock

XYZ is able to raise $1,000,000 by issuing 500,000 new shares at $2 per share. It builds its new factory and immediately sees revenues double and operating expenses increase by $300,000 (about 43%). Let's look at the impact on its financial statements:

Profit per share has almost tripled. That's pretty good.

Scenario B: Use financial leverage, raise $1,000,000 in debt

Let's see what happens if XYZ chooses to use $1,000,000 in debt to finance its new factory. Assume it can borrow at 5% per year.

By using leverage, Company XYZ increases the profit available to shareholders.

Operating Leverage
If we go back to Company XYZ, we can examine the effects of operating leverage on profits. Let's say the company is trying to choose between building their factory or outsourcing production to a third-party manufacturer. If they outsource production, they will pay $0.75 for each $1 widget they sell.

Scenario C: Outsource production instead of investing in additional fixed assets (the new factory)

As in the previous example, assume the company is able to double revenues when the new widget hits the market.

Comparing the results side-by-side, we can see the effects of leverage on profit potential:

Leverage it is not without risk. It requires a commitment to keep up with the principal and interest payments on the debt. If it's unable to do so, it will be forced into bankruptcy and shareholders will lose everything.

Why It Matters

Too much leverage can be bad, but there's no hard and fast rule as to how much is too much. No matter what its use, leverage can be a powerful tool when used responsibly. Savvy investors and companies use leverage to expand, hedge and speculate, but the overly aggressive can easily get in over their heads by losing money or going into bankruptcy.

For investors considering companies with debt, one of the most popular evaluations of a company's leverage is the debt-to-equity ratio (D/E). The interest coverage ratio, also known as times interest earned, is also a measure of how well a company can meet its interest-payment obligations. In general, these ratios suggest whether a company is "too safe" and is neglecting opportunities to magnify earnings through leverage or is overleveraged and at serious risk of default or bankruptcy.

Source: Investing Answers



English Language Learners Definition of leverage

 (Entry 1 of 2)

: influence or power used to achieve a desired result

: the increase in force gained by using a lever



English Language Learners Definition of leverage (Entry 2 of 2)

: to use (something valuable) to achieve a desired result


le·ver·age | \ˈle-vrij, -və-rij \

Legal Definition of leverage 

(Entry 1 of 2)

: the use of credit to enhance one's speculative capacity


transitive verb
leveraged; leveraging

Legal Definition of leverage (Entry 2 of 2)

: to provide (as a corporation) or supplement (as money) with leverage

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