What is Leverage Ratio?
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Answer / neethu
Any ratio used to calculate the financial leverage of a
company to get an idea of the company's methods of
financing or to measure its ability to meet financial
obligations. There are several different ratios, but the
main factors looked at include debt, equity, assets and
interest expenses.
Is This Answer Correct ? | 20 Yes | 2 No |
Answer / chandrasekhar hota
2 types
i> Debt-Equity Ratio = Total Debt / Total Equity
or D/E Ratio = Outsider's funds / Shareholder's funds
O's funds=>debentures+long ter loans+current liabilities
S's funds=>equity share capital+preference share
capital+share premium+reserve surplus
ii> Interest Coverge Ratio = EBIT / Interest Charges
EBIT=>Earnings Before Interest and Taxes
Is This Answer Correct ? | 9 Yes | 10 No |
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