This document discusses financial leverage and its impact on stock returns in the textile sector of Pakistan from 2008 to 2012. It defines financial leverage as the extent to which a company's total capital is composed of debt. The objectives are to examine the possible effects of a firm's leverage on stock returns and analyze leverage's effect in the Pakistani textile sector over the 5-year period. Prior studies found that a firm's beta and equity return variability increase when it finances more with debt. The methodology involves collecting secondary annual data on stock prices and financial information of selected textile companies from sources like the Karachi Stock Exchange and analyzing the relationship between leverage and stock returns. The findings show leverage has a significantly positive effect on returns of high leverage