Definitions Leverage

Total assets at the end of the period under review divided by owners' equity for the same period. A value of 2 indicates that half the assets have been bought with equity, and the other half with current and/or long term debt.


  • Assets = $2,000,000
  • Owners' equity = $1,000,000

$2,000,000 / $1,000,000 = 2