debt/equity ratio

(redirected from Debt 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 ?
Reduction in debt equity ratios is on account of increase in equity due to recording of Minority Interest within Equity; accelerated amortization of stock compensation expense in the initial years under IFRS; recognizing changes in the fair value of available for sale financial investments at reporting date directly in equity which increased the denominator and decrease in liability and increase in equity due to recognition of dividend after shareholder approval.
The results postulate an increase in liquidity ratios; interest coverage ratio; marginal increase in debt equity ratio; and no significant increase in profitability ratios except net profit ratio which rose slightly in the year 2013.
* Debt Equity Ratio : Total Liabilities / Stockholders Equity
Debt Equity ratio is a long term solvency ratio which indicate relation between portion of assets provided by stockholders and portion of assets financed by creditors.
An average debt equity ratio for four years hovering around 0.57 under IFRS as against 0.66 under Indian GAAP reflects financial health and managerial efficiency of the company to external stakeholders.