The leveraged effect is an effect that can be expected to be a large return with less funds than the “principle of leverage (lever)”. For example, in asset management, it is possible to conduct transactions several times to several tens of times against certain margin (deposit) in margin transactions, foreign exchange margin trading, futures, option transactions. As an example, if you do margin trading with equity investment, you can have the stock’s position up to about 3 times your own funds and the leverage will be tripled in this case, but if leveraged three times as much, return and risk will be about It will be 3 times. Companies that are successful in a particular industry may take the approach of raising leverage effect by merging other companies in the same industry. In Japanese IT companies, we are increasingly borrowing from financial institutions and other companies to rapidly M & A Mergers and Acquisitions in the Internet and other fields to demonstrate the leverage effect.
Even if the borrowing ratio becomes high if it is expected to grow, it is reasonable
A certain IT company already has around 500 affiliated companies affiliated with it. Based on the information that comes up from the affiliated company 500 companies, we have created a cycle of M & A for newly expected companies. Major IT companies have borrowed several trillion yen so far, but due to the stable cash flow obtained from the mobile phone business, borrowing from financial institutions has been realized. Companies that are performing well may be able to procure funds to M & A other companies at low interest rates. It is reasonable to borrow even if the borrowing ratio becomes high if borrowing with an interest rate of about 1% and profit of about 10% in the project. There are growing companies that are leveraging the leverage effect by making M & A at a low procurement cost or undergoing company sale while increasing the scale of the business. However, not all companies have succeeded in leverage management. It is necessary to pay attention to that point. In the case that the performance of the company that did M & A does not recover, it becomes management risk.