Topics

Leverage ratio

The leverage ratio is a simple indicator of the ability of a bank or building society to absorb losses. Leverage ratio = Capital / Exposures

The leverage ratio refers to the share of the total value of a firm’s assets and its other commitments (referred to as ‘exposures’) that is funded with high-quality capital capable of absorbing losses while a firm is a ‘going concern’. The lower the leverage ratio, the more than a commercial bank or building society relies on debt to fund their activities

© 2002-2023 Tutor2u Limited. Company Reg no: 04489574. VAT reg no 816865400.