Law and Leverage: Difference between pages

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1. ''Legal systems.''
1.  


The enforceable body of rules that govern any society.
Debt divided by Debt plus Equity = D / ( D + E ).




2. ''Legal systems.''
'''Example'''


One of the individual rules, or classes of rules, making up the body of law.
If the amounts of debt and equity were equal, then leverage under this definition would be calculated as:


1 / ( 1 + 1 ) = 50%.


3.


A principle or model that appears to have high predictive or descriptive value.
2.  


For example, the Law of comparative advantage in economics.
Gearing.  


Or the Law of large numbers in statistics.
Leverage is based on the same inputs, but the calculation would be:


1 / 1 = 100%.


==See also==
*[[Adjudication]]
*[[Antitrust law]]
*[[Arbitration]]
*[[Cartel]]
*[[Case law]]
*[[Civil law]]
*[[Common law]]
*[[Company law]]
*[[Competition law]]
*[[Criminal law]]
*[[Economics]]
*[[Enforcement]]
*[[European Community law]]
*[[Execution]]
*[[Injunction]]
*[[International law]]
*[[Law of comparative advantage]]
*[[Law of large numbers]]
* [[Legislation]]
*[[Public international law]]
*[[Sovereignty]]
*[[State aid law]]
*[[State immunity]]
*[[Suit]]


[[Category:Accounting,_tax_and_regulation]]
3.
[[Category:The_business_context]]
 
[[Category:Compliance_and_audit]]
To increase the level of gearing in an operational or financial structure.  <br />
The intention of leveraging is to improve expected net results.  <br />
The consequence of leveraging is normally to increase financial risk.<br />
Many financial disasters have been a consequence of leveraging up excessively in this way in earlier periods.
 
 
== See also ==
* [[Debt]]
* [[Deleverage]]
* [[Gearing]]
* [[Leverage ratio]]
 
 
===Other links===
[http://www.treasurers.org/node/8012 Masterclass: Measuring financial risk, The Treasurer, July 2012]
 
[[Category:Corporate_finance]]

Revision as of 11:54, 29 May 2015

1.

Debt divided by Debt plus Equity = D / ( D + E ).


Example

If the amounts of debt and equity were equal, then leverage under this definition would be calculated as:

1 / ( 1 + 1 ) = 50%.


2.

Gearing.

Leverage is based on the same inputs, but the calculation would be:

1 / 1 = 100%.


3.

To increase the level of gearing in an operational or financial structure.
The intention of leveraging is to improve expected net results.
The consequence of leveraging is normally to increase financial risk.
Many financial disasters have been a consequence of leveraging up excessively in this way in earlier periods.


See also


Other links

Masterclass: Measuring financial risk, The Treasurer, July 2012

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