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 decreasing debt-to-equity ratios and asset-to-equity ratios of the company clearly demonstrate that the company's real-estate business is currently being financed in a very conservative manner, with a large proportion of investor or shareholder funding and a small amount of debt.
The terms and conditions of the facility agreement contain customary covenants and undertakings including the requirement to maintain certain net debt-to-equity ratios. Dividend payments and other distributions to shareholders will also be restricted.
The debt levels of a company can be measured by comparing its liabilities to its assets and to its equity, and accordingly the debt-to-assets and debt-to-equity ratios are the metrics used in the analysis.
"Loan guarantees are fine, but many of our companies have had (their) credit ratings reduced and we have fairly high debt-to-equity ratios. Borrowing more money isn't necessarily a good thing right now."
* Managers of firms with higher debt-to-equity ratios will choose "income-increasing" accounting alternatives (i.e., higher levels of MSR valuation) in an effort to avoid triggering debt covenants.
This allows cooperatives to meet capital improvement needs through cash-out borrowing, while maintaining low debt-to-equity ratios.
The additional equity will also improve the company's debt-to-equity ratio. And that's good, because investors love lower debt-to-equity ratios...
163(3) (interest limits based on certain debt-to-equity ratios), 166 (worthless debt deduction), 61(a)(12) (cancellation of debt (COD) income) and 108(a)(1)(B) (the insolvency exception from COD) would be superfluous.
They have promised to reduce debt-to-equity ratios to 200 per cent by the end of the year.
The sale is part of a general economic restructuring plan being forced through by government and creditor banks, following last year's massive bailout by the International Monetary Fund, under which debt-laded Korean companies must improve their debt-to-equity ratios by selling off assets or attracting foreign investment.
Kalamazoo's financial policy addresses formal regulations, such as debt service coverage and required reserves, as well as other indicators of financial performance, such as elective reserve levels and debt-to-equity ratios. The policy seeks financial performance above the minimum requirements but not so far above as to cause a heavy burden to ratepayers.
Many households and businesses have materially improved their financial positions--as evidenced by the drop in debt-servicing burdens for all sectors and the decline in debt-to-equity ratios for businesses.