Leverage is the use of borrowed capital (borrowing) to increase the potential return on an investment; In other words, a company is leveraged when it uses debt (increased liabilities) to buy assets.
In simple terms, it means taking on debt to invest in assets that generate a return; With this the company makes a profit with money from others.
The rate you get as a profit must be higher than the interest rate paid on the loan, so the quality of the investment is key.
