Hello everyone,
I was reading & I found that in the Corporate Issuers section of the curriculum they show the Financial Leverage formula as “FL= Total Debt/Shareholders equity”(1); however in the FSA section in the solvency ratios chapter they show the Financial Leverage as “FL=Total Assets/Total Equity”(2) and the previous formula (1) rename it as “Debt-to-equity”. Which formula is the right one to refer as Financial Leverage?
Thank you,