Leverage Ratio

(redirected from Capitalization Ratio)

Leverage Ratio

In risk analysis, any ratio that measures a company's leverage. One example of a gearing ratio is the long-term debt/capitalization ratio, which is calculated by taking the company's long-term debt and dividing it by its long-term debt added to its preferred and common stock. Another example is a simple debt-to-equity ratio, which is calculated by dividing total debt by total equity. Generally, companies with higher leverage as determined by a leverage ratio are thought to be more risky because they have more liabilities and less equity. A leverage ratio is also called a gearing ratio or an equity multiplier.
References in periodicals archive ?
Under Moody's hypothetical extremely severe scenario, the average capitalization ratio globally would drop by 5.
The total debt to capitalization ratio improved to 40.
3 billion, based on an average 70% fixed, non-recourse debt to total capitalization ratio.
Last Friday the company said that if the deal succeeds its debt to capitalization ratio would be under 40 percent at the end of this year.
Kinki Osaka Bank, one of three regional banks operating under Resona's wing, is considering raising 200 billion to 300 billion yen in additional capital in order to raise its capitalization ratio.
Whereas a typical private real estate company may average 80 percent debt, Cali has consistently maintained a debt to market capitalization ratio of just 30 percent, and its 1996 first quarter ratio was 26 percent.