xilinx_altera

A/E = 1 + L/E

since A = E+L

so it is the same thing.

L/E is included if you used A.

no particular reason why A is used instead of L (at least I am not aware of any reason).

But intuitively A/E explains that high leverage ratio means u have a higher amount of Debt. It creates a tax shield - but also has the unwanted complications arising when u as a company fall upon bad times. Since this would cause ur profits to be highly "magnified" when times are good, and your losses are highly magnified as well, when times are bad.

CP