Financial leverage compares total assets with the equity funding behind them.
Financial Leverage Ratio Calculator
Results
Total assets
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Financial leverage
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Table of Contents
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What is Financial Leverage Ratio?
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How to Use This Calculator
- Enter or select Current assets, Non-current assets, Total equity.
- Check the unit beside each measurement. For a percentage or rate, use the scale and time period stated in the form.
- Choose Calculate, then compare the output with the formula and example below. If you change a value or option, calculate again to update the result.
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Formula Used
Leverage = (current assets+non-current assets)/equity
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Variables Explained
| Input | What it means |
|---|---|
| Current assets | Use the measured or stated value for this item, with the unit or category shown beside the field. |
| Non-current assets | Use the measured or stated value for this item, with the unit or category shown beside the field. |
| Total equity | The shareholder funding or residual ownership value used in the selected ratio. |
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Worked Example
Assets of 500,000 and equity of 200,000 give leverage of 2.5 times.
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Why Use This Calculator?
Compare the result with the underlying statement, budget or proposed transaction. It is most useful when every amount uses the same reporting period and the same accounting definition.
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Common Mistakes
- This equity multiplier differs from a debt-to-equity ratio.
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Frequently Asked Questions
Should I use monthly or annual figures?
Use one consistent period for every amount and rate in the relationship. If a form specifies an annual rate or a monthly amount, follow that label rather than mixing time periods.
Does the result include fees and tax?
Only the costs and taxes represented by the inputs and formula are included. A real transaction can include other charges, so compare the estimate with the underlying agreement or statement.
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Sources & References
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