Financial leverage refers to the use of borrowed funds to increase the potential return on investment. By using debt, a company can invest more capital than it currently possesses, aiming to amplify profits. However, this strategy also increases the risk, as the company must repay the borrowed amount regardless of its financial performance. When a business employs financial leverage, it can enhance its growth opportunities. For instance, if a company invests in a new project using loans and the project succeeds, the returns can significantly exceed the cost of the debt. Conversely, if the investment fails, the company still faces the obligation to repay the debt.