le·​ver·​age | \ ˈle-və-rij How to pronounce leverage (audio) , 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

Noun 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. Verb 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 Bolton is a key figure in the Ukraine scandal and other witnesses have said he was deeply angered by Trump's effort to use millions in American defense aid as leverage to bully Ukraine into announcing bogus probes of Democrats. Author: Dave Goldiner, Anchorage Daily News, "John Bolton has $2 million book deal, which could explain his impeachment silence," 10 Nov. 2019 The debt component could be about $48 billion on LBO-style leverage multiples, with an equity part of $37 billion. Chris Hughes | Bloomberg, Washington Post, "How the World’s Biggest Leveraged Buyout Could Be Done," 8 Nov. 2019 Alternatively, the government could use the suit as leverage to force Gilead to lower the price of Descovy as part of any settlement. New York Times, "Who Owns H.I.V.-Prevention Drugs? The Taxpayers, U.S. Says," 8 Nov. 2019 Maddox was quick off the ball and got inside leverage on Patterson. Rich Campbell, chicagotribune.com, "5 observations from rewatching the Bears’ loss to the Eagles, including repeated self-destruction on first-and-10 and Tarik Cohen’s funk," 6 Nov. 2019 The company warned in the SEC filing that its leverage ratio could breach certain restrictions over the next 12 months. Matt Egan, CNN, "Fracking pioneer Chesapeake Energy is drowning in debt," 5 Nov. 2019 There is less speculation and outsized leverage and more long-term investing. Nancy Tengler, USA TODAY, "90th anniversary of Black Tuesday, which heralded the Great Depression, holds lessons today," 4 Nov. 2019 Having physical control over the oil fields could give the U.S.—and its allies—leverage down the road with the Syrian regime and its allies Russia and Iran, Landis said. Robin Wright, The New Yorker, "Trump’s Baffling Plan to Pillage Syria’s Oil," 30 Oct. 2019 The 28-year-old righty had a 4.83 ERA in 69 regular season appearances, most of which came in low leverage spots or mop-up duty. Chandler Rome, Houston Chronicle, "Astros finalize World Series roster," 22 Oct. 2019 Recent Examples on the Web: Verb Prescription digital therapeutics operate at the intersection of biology and technology, with researchers, clinicians, and engineers working in tandem to leverage the power of software to treat disease. Corey Mccann, STAT, "Realizing the promise of prescription digital therapeutics," 29 Oct. 2019 In the meantime, widespread pharmacist involvement will leverage a population of capable professionals to help increase access to birth control and decrease the number of unplanned pregnancies. Sarah Lynch, The Conversation, "How birth control pill prescriptions by a pharmacist could broaden access and keep costs down," 7 Oct. 2019 More established heroes are being leveraged to help launch the Disney+ service, which will launch this fall and serve as a streaming hub for all Marvel properties. David Sims, The Atlantic, "Marvel’s Wide-Open Future," 22 July 2019 If leveraged investing stays below, say, 1 trillion yuan, the A-shares market may well be allowed to blossom. Washington Post, "Relax. China Only Wants a Bull Market, Not a Mad Cow," 18 Sep. 2019 The technology to do that, known as carbon capture and sequestration, involves removing carbon from the atmosphere and either physically storing it, often underground, or leveraging natural processes that capture and store it, as trees do. Andrew Blum, Time, "The Tech Innovations We Need to Happen if We're Going to Survive Climate Change," 12 Sep. 2019 The group plans on leveraging the city’s initial $250,000 investment to attract other public and private donors, Ruíz said. Sara Cline, ExpressNews.com, "San Antonio approves funding of first institute to chronicle Mexican-American civil rights," 12 Sep. 2019 And yet, the 41-year-old rising star may be one of the only Republicans in the state so far to identify a grassroots issue with bipartisan appeal that the GOP can leverage in 2020. Nic Garcia, The Denver Post, "Can these three Republicans save the Colorado GOP from obscurity?," 8 Sep. 2019 Buttigieg didn’t shy away from leveraging his understanding of flyover county and the values of conservative Americans. Katie Palmer, Quartz, "The most important takeaways from the Democrats’ climate town hall," 5 Sep. 2019

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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Statistics for leverage

Last Updated

14 Nov 2019

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


How to pronounce leverage (audio)

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)

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


le·​ver·​age | \ ˈle-vrij, -və-rij How to pronounce leverage (audio) \

Legal Definition of leverage

 (Entry 1 of 2)

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

What made you want to look up leverage? Please tell us where you read or heard it (including the quote, if possible).


concealed or difficult to comprehend

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