Leverage is a complex and versatile tool. Though the theory may be tempting, and leverage can be useful in practice, the inverse is also true. When using leverage, it is possible to gain more and lose more. When an investor uses leverage to make an investment and the investment fails, the investor's loss will be much greater than if the transaction hadn't been leveraged.

First-time investors should avoid leverage until they gain more experience. In business, corporations can employ leverage to create shareholder wealth, but if they do not, interest expense and credit risk erode shareholder value.

Leverage is an important financial tool that can help businesses expand and grow. However, there are some drawbacks to using leverage that business owners should be aware of. Leverage can increase the risk of losses if the investment does not perform as expected. Additionally, businesses that use too much leverage may not be able to meet their financial obligations if the investment declines in value.