Deleverage
A company's attempt to decrease its financial leverage. The best way for a company to delever is to immediately pay off any existing debt on its balance sheet. If it is unable to do this, the company will be in significant risk of defaulting. Investopedia Says:
Companies will often take on excessive amounts of debt to initiate growth. However, using leverage substantially increases the riskiness of the firm. If leverage does not further growth as planned, the risk can become too much for the company to bear. In these situations, all the firm can do is delever by paying off debt.
Any sign of deleverage shown by a company is a red flag to investors who require growth in their companies. Related Terms:
Capital Gearing
Debt Financing
Debt/Equity Ratio
Financing
Leverage
Leverage Ratio
Leveraged Buyout
Long-Term Debt
Unlevered Cost Of Capital |