Deleverage: Definition, Examples & Formulas
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Deleveraging is the process of reducing a company's or individual's debt levels relative to their equity or assets, often through debt repayment or asset sales.
Why is deleveraging important?
Deleveraging is important because it reduces a company's or individual's financial risk by lowering debt levels, improving financial stability, and increasing resilience to economic downturns.
An easy way to understand deleveraging is:
When a company or person reduces their debt by paying it off or selling assets, making them less reliant on borrowed money and more financially stable.