One common way to measure financial leverage is through the debt-to-equity ratio, which shows the proportion of a company's assets that are financed through debt versus equity. A high debt-to-equity ratio indicates that a company is heavily reliant on borrowing to fund its operations, which can be risky during economic downturns or periods of high interest rates. While financial leverage can boost returns in a rising market, it can also amplify losses in a declining market. Therefore, it is crucial for investors to carefully assess their risk tolerance and financial goals before utilizing leverage in their investment strategy. Diversification and risk management strategies can help mitigate the risks associated with leveraging investments, ultimately leading to a more balanced and sustainable portfolio.