At the end of 2013/14, they had debts of more than Rs 1,000 crore, debt-equity ratios
of more than three and interest coverage ratios of less than 1.
The different values for the levered equity implies that the debt-equity ratios
will be different at the end of year 0.
The aforesaid ratings draw strength from the experience of the promoters, long & satisfactory track record of the company, its established position as a mid-sized player in the road transportation & logistic segments, comfortable gearing and debt-equity ratios
and stable outlook for the industry the company is engaged in.
Several traditional financial ratios (the current ratio and quick ratios, days' sales in inventory, debt and debt-equity ratios
, return on assets, and Altman Z-score) were then calculated based on the equations summarized below.
Thus, a firm maximizes its PLRS by making the growth rate in capital in each period equal to the expected rate of growth of its net worth plus some fraction of the difference between its actual and desired debt-equity ratios
While there is no settled rule regarding a specific range, acceptable debt-equity ratios
in recent cases have varied from 1.
Some preparations can be done in advance, for example, looking at debt-equity ratios
, interest cover and whether or not the cash generated by the business will be sufficient to service and ultimately repay the debt.
Effect on debt: Debt-equity ratios
increased by a modest amount for the sample.
However, Model 3 assumes that managers are forced to maximise the market value of debt plus equity by the existence of financial constraints, and this gives rise to an optimal determination of debt-equity ratios
The landlords who have been able to do this have satisfactory debt-equity ratios
Corporate debt-equity ratios
in Korea, which declined following liberalization, returned to its mid-1970s level five years after reform.
In contrast, debt-equity ratios
based on market values increased very little, as higher stock prices offset much of the growth in corporate indebtedness.