Leverage Ratio Calculator: Assess Your Financial Risk Easily
The calculator divides your total liabilities plus debts by your income to reveal your leverage ratio—the share of borrowed money in each dollar you earn. Ratios below 1.0 usually signal manageable risk (Investor.gov). Average U.S. non-financial firms held a 0.55 leverage ratio in 2023 (OECD, 2023).
Leverage Ratio Calculator
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How to use the tool
Total Liabilities: Type every balance-sheet obligation—e.g., 125,500 or 310,200.
Total Debts: Add loans and credit cards—e.g., 38,800 or 96,000.
Total Income: Enter annual income from all sources—e.g., 92,000 or 450,000.
Household leverage under 2.0 is generally considered safe (Federal Reserve FSR 2023).
Average corporate leverage ratio: 0.55 in 2023 (OECD Corporate Finance Statistics).
Basel III sets a 3 % minimum leverage ratio for banks (BIS Basel III, 2014).
US household debt-service ratio sat at 9.8 % in Q4 2023 (Federal Reserve 2024).
FAQ
What is a leverage ratio?
Your leverage ratio shows how many dollars of liabilities and debts you carry for each income dollar earned. It highlights borrowing intensity and risk (Investor.gov).
Why does leverage matter?
Higher leverage magnifies both gains and losses. Excess debt strains cash flow and credit access (Federal Reserve FSR 2023).
What counts as a “good” leverage ratio?
Analysts like ratios below 1.0 for most non-financial entities; banks obey Basel III’s 3 % Tier 1 leverage rule (BIS Basel III, 2014).
How often should I recalculate?
Recompute quarterly for businesses and annually—or before major loans—for households (CFPB budgeting guide).
How can I lower a high ratio?
Pay down high-interest debt, raise income, or refinance to longer terms, reducing numerator or boosting denominator (FINRA, 2023).
Does industry affect interpretation?
Yes. Capital-intensive sectors tolerate higher leverage than service firms. Energy firms averaged 1.2 in 2023, tech 0.3 (S&P Global 2024).
Can leverage predict distress?
Leverage ratios above peer averages raise default probability, but add liquidity and profitability metrics for a full picture (Moody’s Credit Handbook 2023).
Is the calculator secure?
The form runs locally; no data leave your browser. No personal information stores on our servers.
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