Leverage ratios

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.
References in periodicals archive ?
3% at September 30, 2017 while its estimated Common Equity Tier 1 capital, Tier 1 capital and leverage ratios are 12.
The Bank of England (BoE) has announced that it will impose higher leverage ratios on banks.
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.
Supervisors are split over the usefulness of leverage ratios.
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.
BaE-cy said these banks could easily increase their leverage ratios.
Journal Register said it has amended its credit agreement with its lenders led by JPMorgan Chase Bank, lowering its borrowing limit to $150,000 from $200,000 and increasing the leverage ratios it will be allowed to maintain.
First, higher leverage ratios have been required for banks that have been downgraded on the basis of loan losses.
Partially offsetting these negative rating factors are Kingstone's adequate capitalization, favorable operating performance, low net underwriting and investment leverage ratios and its local market knowledge in the state of New York.
Until then, he suggests the use of the old leverage ratios and not the new approach proposed by Basel.
Leverage ratios at local subsidiaries are conservative, with debt-to-EBITDA ratios generally below 1x with the exception of Brazil, which concentrates approximately 45% of consolidated debt.
Leverage ratios of four financial firms had dropped below 4 percent under a stressed scenario.