Leverage Ratio (Investments & Retirement) - Definition, Examples, Advice | Bolder Money

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Definition

A measure of a company’s debt compared to its equity, used to assess financial risk and stability.

What to consider

Use this ratio to understand a company’s debt relative to its equity.
Compare it with industry benchmarks for context.
Be cautious of high leverage, as it can indicate higher risk.

Real world scenarios

Before taking on new debt, the CFO analyzed the company’s leverage ratio to ensure it wouldn’t overextend its financial obligations.

Related terms

Investments & Retirement

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