The Leverage Ratio is a financial metric that measures the proportion of a company's debt to its equity. It helps investors and analysts understand how much debt a company is using to finance its operations compared to its own funds. A higher leverage ratio indicates greater reliance on borrowed money, which can increase financial risk. This ratio is often used by banks and financial institutions to assess a company's ability to meet its debt obligations. Regulatory bodies, such as the Basel Committee on Banking Supervision, also monitor leverage ratios to ensure that banks maintain sufficient capital to absorb losses and remain stable.