What is a Financial Leverage Formula?

Read this tip to make your life smarter, better, faster and wiser. LifeTips is the place to go when you need to know about Forex Leveraged Trading and other Forex topics.

What is a Financial Leverage Formula?

What is a Financial Leverage Formula?

There are several financial leverage formulas, but the most popular is known as the Debt to Equity formula. It is calculated by adding a company's short term and long term debt, and dividing it by its total shareholders equity.

An acceptable ratio is 2 to 1, and anything higher shows the company is at risk.

Forex trading, on the other hand, can allow leverage ratios of up to 400 to 1 - which illustrates the risk inherent in these markets.

   

Comments

Nobody has commented on this tip yet. Be the first.



Name:


URL: (optional)


Comment:


Not finding the advice and tips you need on this Forex Tip Site? Request a Tip Now!


Guru Spotlight
William Pirraglia