Leveraged finance is used to increase an investment's potential returns by purchasing assets with more debt than equity or cash. This is a common practice by private equity firms and leveraged buyout (LBO) firms to increase their investment's IRR.

While having high leverage increases return due to the lower cost compared to equity, it also increases the volatility of a company's earnings and cash flow. The company is also prone to risks such as liquidity of the company, stability of the market, and economic factors such as changes in interest rates.

Use this leveraged finance template to evaluate how leverage finance impacts the IRR to equity investors.

Reviews Add a review
No reviews yet

More From Corporate Finance Institute®

Browse our top rated business templates. See All
restructuring financial model template preview 1 Restructuring Financial Model Template
This restructuring financial model template is used to demonstrate the financial interactions behind the restructuring process. Adjust this model to…
TMT Financial Model Template Preview TMT Financial Model Template
This TMT financial model template is used to value technology, media, and telecom firms. This model provides a template to…
bank financial model template preview 1 Bank Financial Model Template
This bank financial model template is used to value financial institutions group (FIG) companies. This is a comprehensive model that…
Synthetic Call Chart Option Profit/Loss Graph Maker
This free Option Profit/Loss Graph Maker allows the user to combine up to ten different types of options as well…
Directional Trading Strategies Template Directional Trading Strategies Template
The directional trading strategies template allow users to determine the profit when buying options. This template focuses on directional strategies…
HELOC Calculator Template Home Equity Line of Credit (HELOC) Calculator
This home equity line of credit (HELOC) calculator can calculate the maximum amount of loan a homeowner is eligible to…