debt/equity ratio


Also found in: Acronyms.

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 Czech Republic reports a positive correlation of the relation of debt/equity ratio and ROE at the level of 0.72, which would actually mean that the inflow of external finance sources also brings the growth of profitability.
where [GR.sub.ft] represents real sale growth, the dependent variable, [DER.sub.ft] is the debt/equity ratio, [PFR.sub.ft] the profitability rate, [WCSR.sub.ft] the ratio of working capital over sales, [SAR.sub.ft], the ratio of sales to assets, and i the annual CPI-rate of inflation.
Strong expansion potential due to deleveraging; we estimate that the deal reduces Vim-pelcom's pro-forma end-3Q09E debt/equity ratio from 1.4X to 0.9X.
A big jump in the debt/equity ratio occurred in 1989 when RGA divested itself of two valuable assets, one in Colusa County and another in West Sacramento, without paying down a significant portion of the co-op's debt.
* The debt/equity ratio allows you to determine whether the business is overburdened with debt.
(3.) For example, compare te debt/equity ratio of insurance companies or banks with that of other industrial firms.
It is weighted by such things as deviation from the industry average debt/equity ratio and the use of debt to acquire or maintain the core assets of the firm.
Even with a debt/equity ratio of 1.10 (Vencor's is only 0.44), Swenson doesn't believe bankruptcy is likely if the company goes to the banks with a credible plan.
The rather generous German thin capitalization rules (which allow a 9:1 debt/equity ratio for holding companies and a 3:1 debt/equity ratio for operating companies), along with an absence of limits for partnership financing, may make it possible to inject substantial acquisition debt into Germany by using a German acquisition vehicle.
Banks and insurance companies are reluctant, in my experience, to allocate more than $60 million per asset on a non-recourse basis (regardless of the debt/equity ratio)."
parent to reflect its debt/equity ratio in its financial statement balance sheets more accurately than if it had large amounts of borrowed funds matched by excess funds held by affiliates.
averages averages Current ratio 1.2 1.4 1.5 Acid test ratio .8 1.1 1.1 Debt/equity ratio 1.1 1.5 1.9 Receivables age 55 days 42 days 57 days Inventory age 73 days 50 days 48 days Working capital/revenues 8% 8.5% 9.7%