How can leverage be used to increase an organizations profitabililty?
Leverage, in the sense of this question, is borrowing money to help your business growth by buying new machinery, buying another business, etc. Leverage won’t directly increase your business’s profitability, it can be used to buy more than you can currently afford with cash reserves. If the new purchase will pay back the lender who gave you the money to purchase it, plus pay the costs of having it, with money left over then you have increased your profitability. If you changed the question to: ‘How can borrowed money be used to increase an organization’s profitability?’ then you can see my point more clearly.
