What's it: Operating leverage shows you the extent to which a company's operating costs are dependent on fixed operating costs. If the company has high leverage, it shows that the company has a significant proportion of fixed costs. Meanwhile,

# Leverage

## Fixed Charge Coverage Ratio: Calculation and Interpretation

What's it: The fixed charge coverage ratio is a financial ratio to measure how well a company can cover interest and lease payments. Both represent fixed costs, which the company has to pay regardless of whether the company generates

## Debt-to-Equity Ratio: Calculation and Interpretation

What's it: The debt-to-equity ratio is a leverage ratio by compares the relative proportions of a company's capital structure. Specifically, it measures how much debt capital is compared to equity capital. A higher ratio indicates higher

## Assets-to-Equity Ratio: Calculation and Interpretation

What's it: The asset-to-equity ratio is a financial ratio indicating the extent to which a company's assets are financed through equity. We calculate it by dividing total assets by equity. We can find this ratio in the DuPont

## Interest Coverage Ratio: How to Calculate and Interpret it

What's it: The interest coverage ratio is a financial ratio to measure a company's ability to pay interest expense using the profit it generates. Earnings before interest and tax (EBIT) is a commonly used profit metric. It is then