# 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: July 27, 2020