December 19, 2008, Newsletter Issue #85: What are Financial Leverage Ratios?

Tip of the Week


In traditional business courses, financial leverage ratios are ratios used to determine the solvency of a firm, and include the debt to equity ratio, the debt to assets ratio, and interest coverage which equals EBIT/interest charges.

The concept of leverage also applies in trading, as Forex traders use leverage by trading with more dollars that are actually in their accounts.

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Greetings,

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Thank you for your interest and good luck!
Forex Club, New York

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