Leverage ratios

Leverage ratios

Measures of the relative value of stockholders, capitalization, and creditors obligations, and of the firm's ability to pay financing charges. Value of firm's debt to the total value of the firm (debt plus stockholder capitalization).

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 GHOS endorsed proposals from the Basel Committee on a common definition of the leverage ratio, which has been formulated to overcome differences in national accounting frameworks that have previously prevented ready comparison of bank leverage ratios across borders.
Supervisors are split over the usefulness of leverage ratios.
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.
BaE-cy said these banks could easily increase their leverage ratios.
First, higher leverage ratios have been required for banks that have been downgraded on the basis of loan losses.
The ratings and outlook reflect Kingstone's adequate capitalization, favorable operating performance, moderate investment leverage ratios and local market knowledge in New York.
Global Banking News-July 9, 2013--Separate leverage ratios for banking firms under consideration in the US(C)2013 ENPublishing - http://www.
Fitch typically adjusts leverage ratios for on- and off-balance sheet items.
The apex bank said that leverage ratios still lag international rivals.
The ratings and outlook reflect Kingstone's adequate capitalization, favorable operating performance, low investment leverage ratios and local market knowledge in the state of New York.
The new tool will remove excessive debt in the banking system by placing higher reserve requirements on banks that fail to meet specified leverage ratios.