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Loan To Value

Loan To Value or LTV is a ratio of a company’s debts to its total assets. It differs from gearing, which is a measure of a company’s debts to its net assets.

For example, if my company has assets of £100 and them borrows another £100 it now has total assets of £200.

Its Loan to value ratio is 0.5 or 50% = 100/200.

Its gearing is expressed as 100% = 100/(200-100) though remember this can also be expressed as 200 – see the gearing definition.

 

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