Tag: Financial Leverage

debt ratio formula

Debt Ratio in Financial Projections

Leverage is the extent to which a business uses liabilities relative to equity to finance it’s assets. The debt ratio is the ratio of liabilities to assets and is used in the financial projections template as one indicator of financial leverage.

Last modified October 13th, 2022 by Michael Brown
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equity multiplier ratio formula

Equity Multiplier Ratio

Leverage is the extent to which a business utilizes liabilities relative to equity funding, to finance its operations. The equity multiplier is the ratio of assets to equity and is used in the financial projections template as one indicator of leverage.

Last modified August 14th, 2019 by Michael Brown
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financial leverage ratio

Financial Leverage

A business with a high level of financial leverage (sometimes referred to as being highly geared) is considered to be more risky as finance costs need to be paid before equity owners get their return. However, in return for this higher risk a high level of financial leverage will give greater returns to the owners provided cash and profit are managed correctly.

Last modified November 17th, 2022 by Michael Brown
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