Financial Leverage (Historical)
Returns the historical financial leverage ratio (equity multiplier) for a company. This measures how much of the company's assets are financed by equity.
Formula
Financial Leverage = Total Assets / Total Equity
Parameters
| Parameter | Required | Description |
|---|---|---|
| Symbol | Yes | Stock ticker symbol |
| Year | Yes | Fiscal year or period code |
| Quarter | No | Quarter 1-4 |
| TTM | No | "TTM" for trailing twelve months |
Interpretation
- Higher values indicate more debt financing
- Part of DuPont analysis (ROE = NPM x Asset Turnover x Leverage)
- Industry comparison is important
Examples
=hf_Financial_Leverage("AAPL", 2023, 4)=hf_Financial_Leverage("MSFT", "ly")=hf_Financial_Leverage("GOOGL", 2023, , "TTM")When to Use
- DuPont ROE decomposition
- Analyzing capital structure
- Comparing leverage across companies
- Risk assessment
When NOT to Use
| Scenario | Use Instead |
|---|---|
| Debt to equity ratio | hf_Leverage_Ratio() |
| Debt ratio | Debt-specific functions |
| Interest coverage | Coverage ratio functions |
Common Issues & FAQ
Q: What's a good financial leverage ratio? A: It varies by industry. Generally, 2-3 is moderate; over 5 is considered high leverage.
Q: How does this relate to ROE? A: ROE = Net Profit Margin x Asset Turnover x Financial Leverage (DuPont).
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