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 ?
Capitalization ratio: 13.7% Honda Motor Co., Ltd., 86.3% Honda Motor Europe Ltd.
Under Moody's hypothetical extremely severe scenario, the average capitalization ratio globally would drop by 5.5 percentage points, faster than the decline of 4.9 percentage points for the Philippines.
As a result, debt to capitalization ratio rose marginally by 20 basis points to 21.4 percent from 21.2 percent as of June 30, 2013.
Conversely Moody's notes the bank's relatively high Tier I capitalization ratio of 19.2% and recent return to profitability.
Conversely, Moody's noted the bank's relatively high Tier I capitalization ratio of 19.2% and recent return to profitability.
The San Bernardino, Calif.-based cooperative had to raise it capitalization ratio after state regulators discovered it was significantly undercapitalized.
Table 5: Growth and Liquidity on Indian Stock Markets Year Value- Market- Turnover SINDEX traded capitalization Ratio (4) Ratio Ratio (MR) (TR) (3) (VR) (1) (2) 1991-92 0.10 0.32 0.32 0.25 1992-93 0.07 0.35 0.19 0.20 1993-94 0.11 0.35 0.33 0.26 1994-95 0.09 0.51 0.17 0.26 1995-96 0.06 0.57 0.10 0.24 1996-97 0.14 0.54 0.26 0.31 1997-98 0.21 0.55 0.39 0.38 1998-99 0.31 0.49 0.63 0.47 1999-00 0.38 0.41 0.94 0.58 2000-01 0.54 0.38 1.41 0.78 2001-02 0.16 0.28 0.56 0.33 2002-03 0.15 0.29 0.52 0.32 2003-04 0.23 0.43 0.52 0.39 2004-05 0.22 0.58 0.37 0.39 2005-06 0.31 0.86 0.36 0.51 2006-07 0.26 0.87 0.29 0.47 2007-08 * N.A.
Using debt financing will increase leverage as reflected in the debt to capitalization ratio. The balance sheet's asset side will reflect the addition of the newly acquired fixed assets and any use of cash reserves.
The reduction of problematic loans has strengthened the bank by consolidating its assets and maintaining its key capitalization ratio, Executive Vice President and Chief Financial Officer Brian Carlin said Friday.
That would bring the firm's total capitalization ratio from 52 to 60 percent, pushing it dangerously close to violating the terms of the company's arrangements with its current creditors, the company says in its annual filing.
The total debt to capitalization ratio improved to 40.5 percent at the end of 2004 from 44.7 percent at a year earlier, it said.