Leverage

Question 1

Debt-to-equity

Answer 1

Debt-to-equity = Liabilities/Equity

Question 2

Debt-to-value/Debt-to-assets

Answer 2

Debt-to-Assets = Liabilities/(Liabiltiies+Equity) = Liabilities/Assets

Question 3

Gearing

Answer 3

Gearing = (Liabilities + Equity)/Equity = Assets/Equity

The ratios may consider non-current liabilities only.

Question 4

Interest Coverage Ratio

Answer 4

Interest Coverage ratio = Operating profit/Interest Payable

-> A more immediate measure of credit or bankruptcy risk.