Leverage Ratio Formula in Excel

Understanding Leverage Ratio

The Leverage Ratio measures a company's financial leverage, indicating how much debt the company is using to finance its assets. It helps assess the level of risk involved in the company’s capital structure.

• Purpose: Quickly evaluate a company's ability to meet its obligations.
• Key Benefits:
  • Identifies potential overleveraging.
  • Aids in comparing debt levels across different firms.
• When to Use:
  • Before investing in a company.
  • While assessing the firm’s long-term financial health.

Syntax and Parameters

Syntax

=LeverageRatio(Symbol)

Parameter Table

Return Value

The function returns a numeric value or "NA". A higher ratio often indicates greater reliance on debt, while a lower ratio signals more conservative leverage. If the Symbol is invalid or data is unavailable, the function returns NA.

?? Note: This formula does not require date inputs. It focuses solely on the provided Symbol.

Examples and Usage

1. Basic Example – Checking MSFT’s leverage ratio:

   =LeverageRatio("MSFT")

2. Using Index for market-wide leverage insights:

   =LeverageRatio("^SPX")

3. Options Symbol Usage:

   =LeverageRatio("@MSFT 110122C00020000")

4. Crypto Symbol Usage:

   =LeverageRatio("BTCUSD:DEFAULT")

• Interpreting the Result:
  • High Leverage Ratio: Indicates a company is highly dependent on borrowed funds.
  • Low Leverage Ratio: Suggests a more conservative debt approach.

? Pro Tip: Use the leverage ratio alongside other key ratios (like P/E, Market Cap, or EPS) for a well-rounded financial analysis.

Common Questions

1. Why am I getting "NA"?

   • You might be using an invalid symbol or the data is temporarily unavailable. Double-check your symbol and try again.

2. Does this formula accept a date parameter?

   • No. The LeverageRatio function only requires the Symbol parameter.

3. How can I improve performance?

   • Limit the number of live data calls in a single worksheet. If needed, use caching or reference results in a separate cell to reduce repeated calculations.

4. What if I need more in-depth debt analysis?

   • Combine LeverageRatio with other MarketXLS functions like MarketCapitalization or EPS to gain deeper financial insights.

5. Can I use cell references for symbols?

   • Yes, for example:

     =LeverageRatio(A1)

     where A1 contains the symbol text.

?? Note: Always verify your license status with MarketXLS to ensure uninterrupted data access.