Levered

1. Capital asset pricing model (CAPM).

In the CAPM, a levered beta is a beta which takes account of the additional risks of debt finance.

2.

Levered cash flow is the cash flow taking account of debt.

3.

A levered company or business is one that is financed in part by debt.

4.

The term 'levered' may also be used to mean having a high level of debt, in any of these contexts.

Levered is also sometimes known as 'leveraged' or 'geared'.

5.

When quantified, the ratio of Debt / Equity in a company's capital structure.

Maximum borrowing ceilings likely to be lower

"PwC adds that the ceiling on how much businesses can borrow is likely to be lower because of the increased cost of debt and more prudent appetite from lenders.

For example, a company that could previously achieve a five-times levered arrangement may now be looking at three-four times."

Refinancing costs rocket - Philip Smith - The Treasurer - Issue 2, 2024, p21.

See also

• Balance sheet ratio
• Beta
• Capital asset pricing model
• Geared beta
• Geared cash flow
• Gearing
• Guide to risk management
• Ungeared
• Ungeared cash flow

Other resource

• Masterclass: Measuring financial risk, Will Spinney, The Treasurer