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Definition: Trading on Equity, also known as financial leverage, is the balance between the cost financing operations with equity or debt and the income earned from the operations.In other words, it’s a gamble. The company is betting that the return from the investment will generate more income than it costs to finance the investment. Trading on the equity (leverage) refers to the Answer amount of working capital. amount of capital provided by owners. use of borrowed money to increase the return to owners. number of times interest is earned. . What does Trading on Equity stand for? The term ‘equity’ refers to the ownership or ‘stock’ of a company and ‘trading’ means ‘taking advantage of’. Hence, the term ‘trading on equity’ means taking advantage of equity share capital to borrow funds on reasonable basis.

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