[if IE 6]> [if IE]>

Leverage is a Killer

Written by admin on June 17th, 2009

Please expand upon the comment “leverage is a killer”.


1 Comments so far ↓

  1. LuckypineFarmer says:

    Leverage costs in the form of interest payments. Most of our commodities are raised on narrow margins. The volatility in input costs and commodity prices requires discipline to insure debt payments are covered. Failing to cashflow leveraged debt quickly erodes capital and thus the equity one has at risk. The recent housing crisis is a prime example of leveraged debt. If the homeowner makes payments and housing values increase, the return on equity is multiplied by leverage. Conversely, if interest increases, payment fall behind and home values decrease the result is disasterous.

You must be logged in to post a comment.