How does short selling affect the leverage of a portfolio?

I know that if you short a stock you borrow it from a broker, immediately sell it, and then buy it back at (hopefully) a lower price.

But I don't understand how it impacts the leverage of a portfolio. E.g.,

Suppose you have a \$100 initial capital, and ABC is trading at \$10 per share. If you decide to short 5 ABC shares, what would the leverage of your new portfolio be?

I would be grateful for any help/ explanations.

Thanks

Jack

• Shorting an asset is akin to borrowing money. A related question is, how does borrowing money impact the leverage of a portfolio? – Matthew Gunn Jan 19 '18 at 22:11

In your example, assuming the $100 is invested in a long position: ($100 Long + 50 Short) / \$100 = 1.5 or 150%