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Book Leverage

Definition

The book leverage is defined as the amount of debts scaled by the firm's total debts plus common equity.

\text{Book Leverage}_{i,t} = \frac{DLTT_{i,t}+DLC_{i,t}}{DLTT_{i,t}+DLC_{i,t}+CEQ_{i,t}}

where DLTT is the long-term debt, DLC is the debt in current liabilities, and CEQ is the common equity, all from Compustat Fundamentals Annual WRDS.COMP.FUNDA.

If CEQ is missing, the book leverage is treated as missing.


Last update: August 10, 2020

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