debt to equity ratio


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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 to equity ratio

See debt/equity ratio.
References in periodicals archive ?
As a result of these restrictions, dividend payments and other distributions will be subject to an equity injection, or the issuance of other instruments treated as equity under IFRS or other agreed subordinated debt instruments sufficient for Ahlstrom to reduce its net debt to equity ratio by approximately 20 percentage points as calculated based on the company's balance sheet at the end of the first quarter of 2009, as well as sufficient cash flow.
This is likely in practice to impose, however subtly, a greater conservatism in loan structures and to put pressure on groups to accept the Revenue's informal "safe harbor" of a 1:1 debt to equity ratio.
Since the debt to equity ratio is clearly in excess of 1.