Question
Formula for Debit equity ratio
Answers
GPT 3.5
The formula for the Debt Equity Ratio is:
Debt Equity Ratio = Total Liabilities / Shareholder's Equity
Where:
- Total Liabilities is the total amount of debt and other liabilities of the company
- Shareholder's Equity is the total value of the company's equity or ownership stake that belongs to its shareholders
This ratio is used to measure the financial leverage of a company and indicates how much debt a company is using to finance its operations compared to its equity. A high debt equity ratio may indicate that a company is highly leveraged and may be at a higher risk of financial distress, while a low ratio may indicate that a company is less reliant on debt financing.
Debt Equity Ratio = Total Liabilities / Shareholder's Equity
Where:
- Total Liabilities is the total amount of debt and other liabilities of the company
- Shareholder's Equity is the total value of the company's equity or ownership stake that belongs to its shareholders
This ratio is used to measure the financial leverage of a company and indicates how much debt a company is using to finance its operations compared to its equity. A high debt equity ratio may indicate that a company is highly leveraged and may be at a higher risk of financial distress, while a low ratio may indicate that a company is less reliant on debt financing.