Understanding Financial Leverage

Harvard Business Review

"Leverage" is one of the more interesting and difficult concepts to fully grasp in all of finance, but it's important for anyone that borrows or plans to borrow money to understand. Combining the two suggests that the party which borrows has the leverage — they have the power and advantage over others. Yet many people jump into risky financial situations without considering the potential consequences. The second is that the asset underlying the leverage holds its value.

Three Reasons Leaders Should Ask for Help

Next Level Blog

There’s a ton of leverage that comes with a designated leadership position. Just like financial leverage, leadership leverage can yield amazing outcomes when used well or disastrous outcomes when used poorly. There’s a hero myth that can build up around leaders. The great leaders stand alone, indomitable in the face of adversity, accomplishing their goals in the face of all obstacles. The last thing they need is help from anyone else.

The Type of Socially Responsible Investments That Make Firms More Profitable

Harvard Business Review

For investors, this suggests that there is substantial value from analyzing non-financial data and incorporating it into their decisions. Less so for financial institutions or healthcare companies.

How To Really Measure a Company's Innovation Prowess

Harvard Business Review

Financial leverage (assets over equity). With Dupont in mind, we can come up with a better measurement by sub-dividing ROII as follows: Innovation magnitude (financial contribution divided by successful ideas). Who is the world's most innovative company?

Private Equity’s New Phase

Harvard Business Review

This phase was loosely called leverage buy out (LBO) from about 1979 to 1990 and included over 2,000 LBOs. The primary focus was on fixing the acquired firm through financial restructuring, dramatic cost cutting, and strategic slashing.

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Research: CEOs with Diverse Networks Create Higher Firm Value

Harvard Business Review

To estimate the effect of a CEO’s social network’s diversity on their firm’s value, we used ordinary least square regression models to control for other variables that could potentially change firm value, such as firm size, profitability, financial leverage, investment intensity, and corporate governance. Bernhard Lang/Getty Images. Leaders today hear a lot about the importance of having good networks.

How To Really Measure a Company's Innovation Prowess

Harvard Business Review

Financial leverage (assets over equity). With Dupont in mind, we can come up with a better measurement by sub-dividing ROII as follows: Innovation magnitude (financial contribution divided by successful ideas). Who is the world's most innovative company?

Stop Focusing on Profitability and Go for Growth

Harvard Business Review

The global financial crisis prompted many companies to pull in their horns, hoard cash, trim costs, and take a wary view of large investments. Our models suggest that by 2025 global financial capital could easily surpass a quadrillion dollars, more than 10 times global GDP. And the average long-term ROE is more than 25%, reflecting improved efficiency combined with greater reliance on financial leverage at most companies.

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