Long-term debt-to-equity ratio
(redirected from Long Term Debt Equity Ratios)Long-term debt-to-equity ratio
Long-Term Debt-to-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 total value of its preferred and common stock. Put graphically:
Ratio = Long-term debt / (Preferred stock + 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.
Ratio = Long-term debt / (Preferred stock + 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.