LGD Calculator

Written by Great Medico

Updated September 25, 2026 •2 min read

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With LGD Calculator, the useful part is not just the headline result but the relationship between the displayed inputs. It turns those values into one focused figure whose arithmetic can be checked.

What this calculator does

LGD Calculator estimates loss given default from exposure at default and the recovery amount expected after default. It works from exposure at default and expected recovery amount. For LGD Calculator, everything in the result comes from those form values, so you can trace a change in output back to a specific input.

How to use it

Enter Exposure at default and Expected recovery amount. Use one currency for all monetary fields in LGD Calculator; the currency selector formats the result and does not convert exchange rates. Before calculating, recheck Exposure at default, Expected recovery amount against the source numbers you intend to analyze.

How the calculation works

LGD = (exposure at default − recovery amount) ÷ exposure at default × 100%. In LGD Calculator, the calculator applies this relationship to the relevant values used by the stated formula. For LGD Calculator, if the output looks unexpected, recheck the displayed inputs before interpreting the number.

Example

An exposure of $1,000,000 with expected recovery of $400,000 gives a 60% LGD and a 40% recovery rate. To test sensitivity in LGD Calculator, change one displayed input at a time and recalculate.

How to interpret the result

LGD represents the proportion of exposure not recovered in the modeled default scenario. It is one component of credit-loss analysis, alongside probability of default and exposure at default. When comparing LGD Calculator results, change assumptions deliberately so you can see which displayed input caused the difference.

Limitations and notes

Recovery amounts are uncertain and can depend on collateral value, seniority, legal costs, timing, and economic conditions. The calculator does not estimate probability of default, discount delayed recoveries, or produce regulatory capital figures. Keep the source date and assumptions with the LGD Calculator result so a later comparison uses the same definitions.