Deleveraging
From MarketsWiki
Deleveraging is the unwinding of debt. It is a company's attempt to decrease its financial leverage. If it is unable to pay off its existing debt, the company will be in significant risk of defaulting.[1]
Although companies often take on excessive debt to spur initial growth, increasing leverage increases a firm's risk. Deleveraging attempts to lower risk.
When a firm deleverages its balance sheet, it is a sign to investors of slowing growth.[2]
References
- ↑ Deleverage. Investopedia.
- ↑ Deleverage. The Free Dictionary.
