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.
References in periodicals archive ?
While the Company does not expect its Net Leverage Ratio to reduce in 2019, it is a key management priority to reduce it in 2020.
Home prices are much higher in the Bay Area cities which rank 3 and 4 for stretched borrowers, but higher incomes provide some relief and leverage ratios are 3.52 and 3.50 forSan FranciscoandSan Jose.
The leverage ratio framework is intended to address the dangers of excessive accumulation of bank assets without the corresponding capital support.
One virtue of including a relatively simple rule, such as the leverage ratio in a capital regime, relates to the agency of the Federal Reserve Board as recipient of delegated congressional authority.
Palm Hills came fourth with a financial leverage ratio of 0.227; its net debt is EGP 1,500bn compared to total shareholders' rights of EGP 6,600bn.
The proposals put forward are expected to result in Britain lifting the minimum leverage ratio for banks in the future, possibly to 4% or 5%, bank sources said last week.
The leverage ratio is intended as a simple non-risk-based "backstop" measure that will reinforce the risk-based capital requirements.
They are currently being detailed at technical level, in particular in relation to the leverage ratio.
A leverage ratio is calculated by measuring a bank's debt against its shareholder equity.
However, the building society has been given vital breathing space by the regulator on meeting the tougher standard, with the PRA approving its capitalraising plans and giving it until the end of 2015 to increase its leverage ratio from 2%.
Natio leverag theetA But the Bank of England said: "The plan agreed with Nationwide to meet the three per cent leverage ratio in 2015 will not result in them restricting lending to the real economy.
with Nati ratio i resetA But the Bank of England said: "The plan agreed with Nationwide to meet the 3% leverage ratio in 2015 will not result in them restricting lending to the real economy.