debt/equity ratio


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. Bloomberg Financial Dictionary

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   A ratio that measures a company's debt relative to its equity. Calculated by dividing long-term debt by shareholders' equity.

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debt/equity ratio UK US (also debt-equity ratio, debt-to-equity ratio) noun [C]
FINANCE a method of measuring a company's ability to borrow and pay back money that is calculated by dividing the total amount of long-term debt by the amount that shareholders have invested. This method can be used by investors to decide whether or not to invest in a company: »

If the debt/equity ratio is greater than 1, assets are mostly financed through debt; if less than 1, assets are mostly financed through equity.

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The company’s debt-to-equity ratio stood at 0.60:1 and was one of the best among its global peers.


Financial and business terms. 2012.

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