borrowing power

Borrowing Power

1. The ability to borrow more funds. A person or company with a great deal in assets and little in debt is likely to have greater borrowing power than a person or company in the opposite position.

2. The amount an investor may buy on margin. This varies from investor to investor, generally according to credit risk and the amount of collateral his/her brokerage keeps. The brokerage sends each investor a statement each month informing him/her of the amount of borrowing power the investor has.

Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

borrowing power

1. A firm's ability to borrow significant amounts of money. This term is often applied to companies having valuable assets but few outstanding debts.

2. The amount of money that may be borrowed in a margin account.

Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.