Leverage Ratio

(redirected from Financial Gearing)

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 ?
Newly appointed chief executive Matthew Roberts, who was promoted from his chief financial officer role last month, should set out plans to reduce its financial gearing and decide which of its properties can generate an acceptable long-term risk-adjusted return, analysts said.
The company aims to reach financial gearing of 20%, down from 23% at end-September 2018, driven by further divestments, capex and opex efficiency and launch of new projects in 4Q18 and beyond.
What the UK's central bank now presented is a proposal for a fund-based deposit model for a liquidity facility, which would enable Islamic lenders to offer both a wider retail product portfolio and achieve the necessary financial gearing under tighter banking regulations.
'Despite our aggressive expansion strategy, our balance sheet remains healthy and financial gearing still very comfortable, with much room to take on new opportunities that may come our way,' Sian said.
Sheikh Mohamed Bin Faisal Al Thani, Vice-Chairman of Aamal, commented,"This performance clearly reflects the benefits of the group's approach to diversification, building a balanced and resilient portfolio of businesses across key sectors of the broadening Qatari economy, to drive profitable organic growth and margin expansion while maintaining strict control of costs and prudent levels of financial gearing." Tarek M El Sayed, Managing Director, said,"Aamal's nine-month results again reflect our strong focus on operational excellence and cost efficiency as we continued to translate our top-line performance into higher profits and build an ever stronger foundation for long term value creation.
With a strong balance sheet and low financial gearing, we are well positioned to take advantage of new potential PRS investment opportunities following the EU referendum.
URC is now in a net debt position of P18.49 billion with a financial gearing ratio of 0.51 (0.16 in FY2014) as it financed the Griffin's acquisition via long term debt.
By progressively adjusting its debt structure, the Group has been effectively controlling its financial gearing and debt level.
He then shows people who are not economists or bookkeepers how to analyze and interpret a report's account of profitability, liquidity, financial gearing, shareholder interests, predicting corporate failure, using other information in company annual reports business valuations, and what financial statements do not reveal.
"This has driven some outstanding financial performance, allowing us to retire a significant proportion of the company's debt and reduce financial gearing. With our positive outlook for 2012, we have recently set a new target to reduce gearing to around 60 percent by the end of this year."
Nevertheless, there is a considerable risk in the valuation because the financial gearing is high after the capitalisation in June.
It stressed the "well-publicised change in the availability of financing for commercial transactions" and pointed out that "the market's attitude towards financial gearing has changed significantly, especially against the backdrop of the uncertainty in the economy".