what is a good leverage ratio 
that depends on the particular leverage ratio being used as well as the type of company for example capital intensive industries rely more on debt than service based firms so they would expect to have more leverage to gauge what is an acceptable level look at leverage ratios across a certain industry it s also worth remembering that little debt is not necessarily a good thing companies can use debt to deliver shareholders greater returns the bottom lineleverage ratios are useful tools they provide a simple way to see the extent to which a company relies on debt to fund its operations and expand debt is important when used effectively it can generate a higher rate of return than it costs however too much is dangerous and can lead to default and financial ruin leverage varies by industry certain types of companies rely on debt more than others and banks are even told how much leverage they can hold leverage ratios work best when compared to the past or a peer group 