Leverage Ratio


Also found in: Dictionary, Thesaurus, Medical, Encyclopedia.

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 ?
The Bank of England (BoE) has announced that it will impose higher leverage ratios on banks.
The BoE's Financial Policy Committee (FPC) is due to revealchanges to the leverage ratio framework in November, and gave banks until Friday to respond.
The Committee will continue to monitor the implementation of the leverage ratio.
I remain keen, as I know you are, for the UK to be fully compliant with international standards for the leverage ratio, and the UK will of course have to fully comply with any future standards from the EU," wrote Osborne to the governor.
The announcement on leverage ratios took banks and building societies by surprise, as they had been preparing for a 2019 deadline on implementing the tougher new capital rules.
In order for a bank to be considered well capitalized in the United States, it must have a leverage ratio of 5.
Cal Dive added that it will temporarily increase its permitted maximum consolidated debt to EBITDA leverage ratio, lower the quarterly term loan amortisation, allow transfer of diving vessels Eclipse and Texas to a subsidiary thus releasing them as collateral under the credit agreement by amending its credit facility.
Conversely, CFOs may wish to take on more debt as a result of the improved leverage ratio, and use the proceeds to profitability reinvest in other parts of the business.
The ratings and outlook reflect Kingstone's adequate capitalization, favorable operating performance, moderate investment leverage ratios and local market knowledge in New York.
The central bank of Kuwait has announced that it has approved instructions for banks' leverage ratio standards.
Operating profit rose to SEK 419 (330) million and Kommuninvest reported a leverage ratio of 1.
The Financial Policy Committee is today launching a consultation on the design of a leverage ratio framework for the UK.