Fixed Income

Leverage Ratio

Definition

What is Leverage Ratio?

A measure comparing debt with earnings, assets, or equity.

Example in practice

How This Looks in Practice

Net debtInterest-bearing debt minus cash and cash equivalents. equal to four times EBITDAEarnings before interest, tax, depreciation, and amortisation. indicates significant leverageThe use of borrowed money or derivatives to increase exposure relative to invested capital..

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Related Terms

Fixed Income

Bond

A debt security through which an investor lends money to an issuer in return for promised payments.

Fixed Income

Issuer

The government, company, or organisation that creates and sells a security.

Fixed Income

Face Value

The principal amount stated on a bond and usually repaid at maturity.

Money Markets

Treasury Bill

A short-term government debt instrument usually issued at a discount and repaid at face value.

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