Leverage Ratio Calculator

Formula

To calculate the Leverage Ratio (LR):

\[ LR = \frac{TA}{TE} \]

Where:

$LR$ is the Leverage Ratio
$TA$ is the total assets ($)
$TE$ is the total equity ($)

What is the Leverage Ratio?

The Leverage Ratio (LR) is a measure of a company's financial leverage. It is calculated by dividing the company's total assets by its total equity. This ratio indicates the proportion of a company's assets that are financed by equity versus debt[^1^][^2^].

Example Calculation 1

Let's assume the following values:

Total Assets ($TA$) = $3,500,000
Total Equity ($TE$) = $1,500,000

Using the formula:

\[ LR = \frac{3500000}{1500000} = 2.3333 \]

The Leverage Ratio is 2.3333.

Example Calculation 2

Let's assume the following values:

Total Assets ($TA$) = $5,000,000
Total Equity ($TE$) = $2,000,000

Using the formula:

\[ LR = \frac{5000000}{2000000} = 2.5 \]

The Leverage Ratio is 2.5.