Leverage not rising
What it measures¶
This check divides the company's debt — its long-term borrowing, including the part that falls due within the coming year, together with any short-term borrowing, as the stored total debt carries it — by average total assets, the mean of the assets at the start and the end of the year. It compares the result with the year before and asks: did it stay level or fall? The figure shown is the change in percentage points: from 20% of assets to 22% is a rise of 2 percentage points.
Why it is on the page¶
A company that has to borrow more, relative to what it owns, is often one whose own cash no longer covers its needs. Piotroski's checklist counts a rise in this ratio against a company, and his study found the check useful in telling companies apart. It compares the company only with its own past, so the line is the same in every industry.
Thresholds, their source and the population they were fitted on¶
| Result | When |
|---|---|
| ✓ passed | the ratio is the same as or lower than last year (change 0 or less) |
| ✕ failed | it rose |
| ○ not evaluable | the debt or the total assets of one of the years needed is not stored |
| ○ not applicable | the company has no debt in either year |
- Source: Piotroski (2000), the check he called
F_ΔLEVER. - Fitted on: US companies whose shares were priced low against the equity on their balance sheet, fiscal years 1976–1996.
- Evidence grade: peer-reviewed and replicated.
- Basis: own history.
A worked example¶
Honeywell International, fiscal year 2025 (statements stored on 25 October 2026): debt fell by 0.6 percentage points of average assets — passed.
Meta Platforms, the same year: it rose by 6.9 percentage points — failed, and the Debt & solvency tile's reason sentence named it: Leverage not rising (6.9 pp) misses Δ ≤ 0, vs its own history.
What “No verdict” means here¶
The check needs the debt and the total assets of three consecutive year-ends (two averages). When one is missing it is not evaluable, the input is named, and it leaves the area's count without counting as a failure.
What the verdict is and is not¶
A pass says the company did not lean more on debt this year than last. It says nothing about whether the debt is large — that is Leverage — and borrowing to build something profitable can be a sound decision that this check still counts as a rise. It is not a forecast and not an instruction to trade the shares.