Instructor for this course

Financial ratios are financial metrics that determine relationships between aspects of a company’s operations and financial position. The next course in this series on financial ratios is focused on leverage ratios. Leverage is created through various situations including when:

  • A company takes on debt to purchase specific assets.
  • A company borrows money based on the overall creditworthiness of the business.
  • A company borrows money to finance an acquisition. 
  • A private equity firm (or other company) does a leveraged buyout.  
  • An individual works with options, futures, margins or other financial instruments.

Equity investors borrow money to leverage their investment portfolio. A leverage ratio looks at how much capital comes in the form of debt (loans) or assesses the ability of a company to meet its financial obligations.  The leverage ratio is important given that companies rely on a mixture of equity and debt to finance their operations.

This course focuses on various leverage ratios, their purpose, calculation, and meaning.

Note: This course is also a part of The Controllership Series.

Learning Objectives

  • Review basic ratio analysis math concepts.
  • Identify the types of leverage ratios.
  • Evaluate the purpose and calculation of various leverage ratios including:
    • Debt-to-Assets Ratio
    • Debt-to-Equity Ratio
    • Debt-to-Capital Ratio
    • Debt-to-EBITDA Ratio
    • Equity to Asset Ratio
  • Explore the concept of capital structure ratios.
    • Debt to capitalization ratio
    • Degree of financial leverage
  • Explore a comprehensive example of ratio calculation
Last updated/reviewed: May 15, 2022

Included In Certifications

This course is included in the following Certification Programs:

18 CoursesFinancial Statement Preparation, Reporting and Auditing Certification

  1. Financial Statement Introduction
  2. GAAP Principles, Assumptions and Considerations
  3. GAAP Presentation of Financial Statements
  4. Management Discussion and Analysis (MD&A) Update
  5. Sarbanes Oxley (SOX) Overview
  6. Sarbanes-Oxley Section 302: ICFR
  7. XBRL (Extensible Business Reporting Language) Introduction to Basics - Updated
  8. XBRL - Connection to SOX 302/404 and Critical Roles
  9. Analyzing Financial Ratios - Solvency, Liquidity and Debt
  10. Analyzing Financial Ratios - Leverage
  11. Analyzing Financial Ratios - Performance And Efficiency
  12. Financial Statement Audit in Accordance with GAAS - General Standards
  13. Financial Statement Audit in Accordance with GAAS - Conducting the Audit
  14. Financial Statement Audit in Accordance with GAAS - Auditors' Report and Opinion
  15. Introduction to Accounting for Income Taxes Based on Income
  16. Practical Application For Accounting For Income Taxes Based On Income Part 1
  17. Practical Application For Accounting For Income Taxes Based On Income Part 2
  18. FASB Codification Research System

15 CoursesManagement Oversight, Analysis and Internal Controls Certification

  1. Management Internal Control Essentials
  2. Comprehensive Examination of COSO 2013: Components and Principles
  3. Keys to an Effective Code of Conduct
  4. Fraud Risk Assessments
  5. Enterprise Risk Management 101
  6. Identifying and Implementing the Proper Balance of Internal Controls
  7. Information Technology (IT) Controls in Emerging Business Environments
  8. Analyzing Financial Ratios - Solvency, Liquidity and Debt
  9. Analyzing Financial Ratios - Leverage
  10. Effectively Managing and Controlling Travel and Entertainment (T&E) Expenses
  11. Keys to Understanding Conflicts of Interest
  12. Documentation Methods For Internal Control Processes
  13. Segregation of Duties for Core Business Processes
  14. Professional Skepticism - Keys to Maintaining
  15. Whistleblower Hotlines - Effective Management

18 CoursesThe Controllership Series Certification

  1. The Controllership Series: The Controller Function - Elevating the Role
  2. The Controllership Series: The Controller Function - Strategic and Annual Planning
  3. GAAP Principles, Assumptions and Considerations
  4. The Treasury Function Part 1: Cash, Liquidity and Investments
  5. The Controllership Series: The Controller Function - Cash and Investments
  6. ASC 842 Accounting for Leases - Deep Dive
  7. Revenue Recognition (ASC Topic 606) Standard Overview
  8. The Controllership Series: The Controller Function - Inventory Part 1
  9. The Controllership Series: The Controller Function - Inventory Part 2 - Inventory Valuation, Physical Inventory Methods and Inventory fraud
  10. The Controllership Series: Overhead, Direct and Indirect Costs and Allocation Methods
  11. The Controllership Series: Financial Statement Preparation and Presentation
  12. Analyzing Financial Ratios - Leverage
  13. Analyzing Financial Ratios - Performance And Efficiency
  14. The Controllership Series: The Controllers Role in Data Analytics and Big Data
  15. The Controllership Series: The Financial Close Process
  16. The Controllership Series: Managerial Accounting Basics and Cost Principles
  17. The Controllership Series: Sales, Collections and Customer Credit
  18. Tools for The Controllership Series Certificate

12 Reviews (49 ratings)Reviews

Anonymous Author
This was a very informative class, but I feel the need to study the content more, since the purpose is to understand what the ratios show not just what they are.
Member's Profile
Hard course. Lots of good information and valuable, but the test questions were a little specific and had to review material again to pass.
Anonymous Author
The instructor did a nice job of explaining the Degree of Financial Leverage, one of the more complex concepts of the course.
Anonymous Author
Good review of several different important financial ratios presented in a complete and easy to understand method.
Anonymous Author
Excellent presentation and examples of how to use financial ratios to analyze leverage in a company.
Anonymous Author
This was an interesting course. The way the slides are setup I had to think though some scenarios.
Anonymous Author
These have always been a bit confusing to me when analyzing, so this was a good refresher.
Anonymous Author
Great course. Stated learning objectives were met. Instructor was effective
Member's Profile
Enjoyable course with a lot of information given. Little more challenging.
Member's Profile
The formulas were hard to follow because of the formatting in the slides
Member's Profile
This was very helpful. The detailed problem summary at the end helped.
Anonymous Author
Enjoyable review of Debt and Leverage ratios for a company!


Course Complexity: Foundational

No Advanced Preparation or Prerequisites are needed for this course. However, it is recommended to take the other courses in the series prior to completing this one.

Education Provider Information

Illumeo, Inc., 75 East Santa Clara St., Suite 1215, San Jose, CA 95113
For more information regarding this course, including complaint and cancellation policies, please contact our offices at (408) 400- 3993 or send an e-mail to .
Course Syllabus
  4:19Introduction to Financial Ratio Analysis – Leverage Ratios
  9:13Math & Leverage Ratios
  8:56Leverage Risk & Ratios
  7:31Capital Structure and Debt/Equity
  16:07Debt Capital & Degree of Financial Leverage
  9:56Comprehensive Example & Summary
  1:08:21Financial Ratio Analysis – Leverage Ratios Full Video
  PDFSlides: Financial Ratio Analysis – Leverage Ratios
  PDFFinancial Ratio Analysis – Leverage Ratios Glossary/Index