Overview
Leverage Index (LVGI), is a core indicator used to evaluate financial condition and operating performance. Quarterly (Q) scope increases short-term volatility visibility.
Formula
(Total Debt / Total Assets) current period / (Total Debt / Total Assets) prior period
How to Interpret
High Value
A sustained high Leverage Index (LVGI) can shift expectations around the firm’s cost of capital.
Low Value
If Leverage Index (LVGI) remains depressed, investors may revise forward assumptions downward.
Where It Is Used
Leverage Index (LVGI) should be paired with at least one complementary quality metric in decision filters.