What is meant by "Trading on Equity"?

Trading on equity has to do with making use of borrowed funds to increase or expand the investment of capital.

Respected Sir,

I do not have any experience on Equities. And also do not want to give answers which I can copy from google.

I do beilive that real experience gives more learning than to copy concepts from knowledge avaialbe.

Thanks for kind invitation to answer your question.

Regards

Arinjay

Trading on equity is sometimes referred to as financial leverage or the leverage factor. Trading on equity occurs when a corporation uses bonds, other debt, and preferred stock to increase its earnings on common stock. For example, a corporation might use long term debt to purchase assets that are expected to earn more than the interest on the debt. The earnings in excess of the interest expense on the new debt will increase the earnings of the corporation's common stockholders. The increase in earnings indicates that the corporation was successful in trading on equity.

I may try to answer this in my own way. I expect some Expert comment on my answer.

Trading on Equity is a Term referred to WHILE FIXING a ratio of Borrowed Funds and Owned Funds and also to fix a ratio of Equity/Owned Funds to Other Calsses of Shares and Debentures.

Trading own Equity means the benefit derived by the Equity holders at the expense of Other class of Shares/Debentures/Long Term borrwals  in a High profitability/Less risk calculations in feasibility reports, and company having very Good reputation and brand value in the Financial Market.  i.e. the benefit on determining a Fine Capital Mix  and to have close holding of the Securities to have higher control on Future expectations.

I really expect some more clarified answer and request sharing Experience by Experts.

I appreciate the efforts taken  for following my question.