debt/equity ratio

(redirected from Debt to Equity Ratios)

Debt/equity ratio

Indicator of financial leverage. Compares assets provided by creditors to assets provided by shareholders. Determined by dividing long-term debt by common stockholder equity.

Debt/Equity Ratio

In risk analysis, a way to determine a company's leverage. The ratio is calculated by taking the company's long-term debt and dividing it by the value of its common stock. Put graphically:

Debt/equity ratio = Long-term debt / Common stock

The greater a company's leverage, the higher the ratio. Generally, companies with higher ratios are thought to be more risky because they have more liabilities and less equity. See also: Long-Term Debt/Capitalization Ratio.

debt/equity ratio

The ratio of mortgage debt to the owner's equity in the property.Typical home mortgage lenders require a debt/equity ratio of 80 percent—meaning they will loan up to 80 percent of the value of the home.Higher ratios can be obtained by purchasing private mortgage insurance. Commercial lenders have varying requirements depending on particular market circumstances at the time.

References in periodicals archive ?
The amendment to the agreement establishes new covenants regarding minimum net worth and maximum debt to equity ratios.
AHFC's adjusted debt to equity ratios are among the lowest of all housing finance agencies and increased slightly to 1.
NPRG will undertake a more detailed examination based on criteria including debt to equity ratios, cost per customer, days service outstanding, gross margins and other factors, to identify the traits market leaders share.
Deering, Chairman and CEO of The Rouse Company, stated, "This joint venture is very significant because it completes the capitalization of the Company's acquisition of these important retail centers with no negative impact on our debt to equity ratios and without the need to issue any common or preferred equity.
Deering, chairman and chief executive officer of The Rouse Company, stated, "This transaction is important because it will enable the Company to complete its acquisition of the TrizecHahn properties without any significant impact on our debt to equity ratios and without the need to issue any common or preferred equity.
Access to the increased credit line is subject to completion of loan documentation and borrowing base limitations affected by levels of eligible inventory and receivables, debt to equity ratios and other variables.