Leverage Ratio

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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.
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The company is making some adjustments for the implementation of IFRS 16 - Leases and the neutralisation of any potential effect on its consolidated financial leverage ratio from such adoption, under the amendments to the 2017 Credit Agreement.
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ISV's Fitch-calculated financial leverage ratio (FLR) increased to 29% at end-2017 (end-2016: 23%) as the group received an infra-group subordinated loan for EUR600 million in 2017.
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Last is the Financial Leverage Ratio, also known as the equity multiplier, where it exposes a company's capital structure or how much of its capital is owned by creditors and the shareholders.
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The financial leverage ratio was 10.6 % for the period ended 31 March 2017.
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High leverage ratios--In a high financial leverage ratio scenario, a company is using debt and other liabilities to finance its assets.
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However, Heliopolis Company for Housing & Development, which rely on over-drafting from banks to finance their obligations, have posted a financial leverage ratio that surpassed 1.
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According to the firm, the index family is designed to measure high quality stocks in the global equity markets on the basis of their quality score, which is calculated based on three fundamental measures return on equity, accruals ratio and financial leverage ratio.
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Although there may be a small increase in Ameriprise Financial s financial leverage ratio upon issuance, the pro forma impact on financial leverage, along with interest expense coverage, is expected to remain well within A.M.
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"While PLC's traditional GAAP-based financial leverage ratio at 23% is consistent with industry norms, the high total financing and commitments (TFC) ratio at 1.37 times, as well as the heavy use of surplus notes at Pacific Life at 17% of statutory capitalization diverges from that of life industry peers.
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Moreover, as a result of a mild economic recession, net income is projected to remain flat, and the board of directors has mandated a 10% reduction in the financial leverage ratio, defined as assets/owners' equity, because they believe the company's use of leverage is too aggressive.
Instant insight. Delta Factor reference tables transform financial ratio analysis into a useful, forward-looking planning tool. (Financial Management)
* Financial Leverage ratio: Total Assets/Net Worth; And lastly,
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Sirius Group's financial leverage ratio (FLR) is reasonable at 24.7% as of Sept.
Fitch Affirms Sirius Group's Ratings; Outlook Stable

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