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Leverage Ratio

vCalc Reviewed
`LR = ( tL + tD )/ tI `
`(tL)"Total Liability"`
`(tD)"Total Debt"`
`(tI)"Total Income"`

The Leverage Ratio calculator computes the ratio of the sum of liabilities and debt verses income.

INSTRUCTIONS:  Choose your currency units (e.g. Indian Rupee), and enter the following:

  • (tL) Total Liabilities
  • (tD) Total Debt
  • (tI) Total Income

Leveraged Ratio (LR): The calculator will make the needed currency conversions and compute the Leverage Ratio. 

The Math / Science

This formula calculates a ratio that compares debt to income.  Personal liabilities and debt include loans (home, education, auto) and other debts such as back taxes or rent (i.e. things one is obligated to pay).  

This formula provides a snapshot at an instant in time.  Generally one wants to minimize this ratio, because it often affects one's ability to qualify for commercial lending (bank loans etc.).

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