Float Ratio

Leverage ratios measure the capital structure of a firm, and are used by investors to assess solvency. They measure the amount of debt used to finance the operations of the business, compared to the amount of equity (or ownership) held by the shareholders. Leverage ratios are very important because they directly affect a firm’s ability to pay its obligations and keep its operations running.

The most common leverage ratio is the debt to equity ratio. This tells investors how much debt a company has compared to the amount of money invested by shareholders. If the debt to equity ratio is high, it means that the company is highly leveraged, meaning it is more exposed to potential losses and defaults if the economy worsens. On the other hand, if the ratio is low, it means the company uses less debt and relies more heavily on equity financing.

Leverage ratios also include the debt to asset ratio, which compares the amount of debt a company has to the amount of assets it holds. This is important because it shows how much risk the company is exposed to if its assets fail to generate profits. If the debt to asset ratio is high, it means the company is taking on more risk in order to generate profits.

The fixed charge coverage ratio measures a company’s ability to pay its fixed costs, such as interest payments. This ratio is calculated by dividing the company’s operating income by its fixed costs. A high fixed charge coverage ratio is a good sign because it shows that the company is able to meet its obligations.

Finally, the interest coverage ratio shows how easily a company can make its interest payments. This ratio is calculated by dividing a company’s operating income by its interest expense. A high interest coverage ratio is a positive sign, as it means the company will be able to make its debts payments even in difficult times.

In summary, leverage ratios are an important tool for investors to assess the financial health of a company. They measure how much debt the company has relative to equity, assets, and its fixed costs, and can also indicate the company’s ability to make its debt payments. Leverage ratios are a key factor in determining the company’s creditworthiness, and should not be ignored when assessing the viability of a potential investment.

Proportion of floating stock, also known as free float, is a measurement that calculates the number of shares held by the public in companies listed on the stock exchange. Its defined as the total number of listed shares minus the closely held shares of companies promoters, directors, and large shareholders who, for a variety of reasons, are unlikely to trade their shares. By removing these closely held shares, the free float then indicates the amount of shares available in the market to be tradeable, providing a more accurate picture of the total number of shares that investors can purchase and sell. Thefree float is one of the most important components of market capitalization because it is a figure used to measure a companys market value in the international market without including any closely held shares that are not available in the market. Therefore, the higher the percentage of publicly-held shares, the higher the market value of the firm.