A term used in finance that refers to the extent to which a company finances its business using debt. Leverage usually describes the amount of a company's debt relative to the equity in its capital structure. A highly leveraged company (sometimes called a highly levered company) is considered to have a large amount of debt compared to its equity.

Leverage is beneficial to a company and its shareholders when the proceeds of the debt are invested by the company and the revenues generated by the investment exceed the costs of servicing the debt. In this case, the net effect of incurring the debt is to increase the company's earnings.

Although a highly leveraged company has greater potential for gains, higher leverage increases financial risk when the company's business suffers a downturn and the company must continue to make interest and other payments on its debt from declining cash flows.

The extent of a company's leverage is often expressed in relation to its most recently reported EBITDA. This is because many loan agreements that contain financial covenants limit the amount of debt that the borrower can have by reference to its leverage ratio, which measures the proportion of the borrower's debt to its EBITDA. If a company has twice as much debt as the EBITDA it generates, it is described colloquially as having leverage of "two turns" of EBITDA.