For a start-up business, some leverage is almost always necessary. Are there points in the business cycle where the risks are greater? What types of businesses or industries generally require more leverage?
Leverage, as a business
term, refers to debt or to the borrowing of funds to finance the purchase of a
company's assets. Business
owners can use either debt or
equity to finance or buy the company's assets. A good example
of capital business firm is the automobile manufacturing companies. This is because they have a huge amount of
equipment that is required to manufacture their product - automobiles.