Leverage ratios are concerned with the extent to which a firm relies on borrowed funds in its operations.

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Leverage ratios, such as debt-to-equity ratio and debt-to-asset ratio, measure a firm's use of debt financing in relation to its equity or total assets. It is important to monitor leverage ratios as high levels of debt can increase financial risk and impact a company's ability to repay its obligations.

Leverage Ratios Are Concerned with the Extent to Which a Firm