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.

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Under current regulatory capital standards, the Company's estimated common equity Tier 1 to risk-based assets, total risk-based capital, Tier I capital, and leverage ratios were 10.56%, 12.87%, 12.12% and 11.51%, respectively, at June 30, 2019.

1st Constitution Bancorp reports Q2 adjusted EPS 41c, consensus 39c

The fund has the ability to assume economic leverage through derivative transactions, which may not be captured by the preferred shares asset coverage tests or effective leverage ratios. The fund does not currently engage in derivative activities for speculative purposes and does not envision engaging in material amounts of such activity in the future.

Fitch Affirms Preferred Shares Issued by Federated Premier Municipal Income Fund at 'AAA'

Kapfidze continued, "Historical data shows that nationally leverage ratios increased from 2.30 in 2014 to 2.56 in 2017 as home prices rose faster than incomes.

LendingTree analysis reveals where homebuyers are stretching to buy

The revision in the outlooks to stable reflects the company's steady increase in net and gross underwriting leverage ratios over the latest five-year period due to its significant premium growth, which has come from the company's personal auto book and its entry into the commercial auto space, the release added.

A.M. Best Revises Outlooks to Stable for Agency Insurance Company of Maryland

The practice boosts leverage ratios allowing banks to report them as being in line with regulatory requirements.

Bank of International Settlements says banks could be using measures to hide debts

For the last 30 years, the United States has had both leverage ratios and risk-based capital requirements.

Comments and Discussion

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.

Basel Committee updates on regulatory reform

! LONDON, Rabi'I 12, 1435, Jan 13, 2014, SPA -- Britain's FTSE 100 share index edged up towards two-month highs on Monday, supported by a rally in heavyweight financials after regulators agreed to ease a new rule on how banks' leverage ratios are calculated, Reuters reported.

FTSE 100 up 0.1 pct

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.

Building society reveals plans to raise PS1bn

A separate central bank statement has earlier said stronger bank leverage ratios are "important for the establishment and sustainability of financial stability." The bank already expects an expansion in Turkish bank assets and is acting early to avert an overheating.

Radar on bank leverages, market resilience, says central bank

Concerning the leverage ratio, another highly political aspect, several member states are said to support the idea of not obliging financial institutions to publish their leverage ratios, as obliged under the Basel III agreements, prior to adoption of a decision on binding application of these ratios, in other words, not before 2018.

BANKING : CRD IV: TALKS STALLED IN COREPER

Abstract: The paper analyses indicators of safety, precisely liquidity and leverage ratios, of three big Croatian shipyards.