Target Leverage Ratio

Target Leverage Ratio

The ratio of the market value of debt to the total market value of the firm that management seeks to maintain.

Target Leverage Ratio

The level of debt that a company wishes to maintain expressed as a percentage of its market value. Some companies are more comfortable with debt than others. Increased leverage increases the risk to a company, but can increase returns.
References in periodicals archive ?
i,t] is the estimated target leverage ratio given firm characteristics at t - 1.
Target leverage ratio will be estimated analysing annual panel data of companies i Western Europe covering period from 2003 to 2010.
The deal improves Premier's earnings-to-debt ratio and means it is now likely to hit its target leverage ratio two years ahead of schedule.
With the completion of the Transaction, USG will be able to reduce debt and achieve its target leverage ratio, accelerate high return investments in its Gypsum and Ceilings businesses through advanced manufacturing initiatives, and place the company to consider future capital returns to shareholders.
We also control for the impact of the target leverage ratio on financing decisions using the approach outlined in Hovakimian, Opler, and Yitman (2001) who examine the debt-equity choice.