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Financial Leverage Ratios

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Financial leverage ratios
Common ratios are debt divided by equity a debt divided by the sum of debt plus equity. Related: capitalization ratios.

Financial Leverage Ratios
In risk analysis, any ratio that measures a company's leverage. One example of a financial leverage 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 it 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 financial leverage ratio are thought to be more risky because they have more liabilities and less equity. A financial leverage ratio is also called a gearing ratio.


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Table 3 contains empirical support for results reported by Jensen et al establishing higher financial leverage ratios linked to both lower research and development expenditures and lower business risk.
Best will continue to monitor the group's risk-adjusted capital, financial leverage ratios and fixed charge coverage with the expectation that RenaissanceRe will remain within acceptable ranges to support its FSRs, ICRs and debt ratings.
Best will continue to monitor the group's risk-adjusted capital, financial leverage ratios and fixed charge coverage with the expectation that RenaissanceRe will remain within acceptable ranges to support its FSRs, ICRs and debt ratings.
 
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