The debt/equity ratio measures a company’s use of debt compared to total external financing. Financial ratios provide benchmarks for companies to compare their information with others, and the debt to total equity ratio falls within the group of the financial leverage ratio. Benchmarking is the primary use of the debt to equity ratio. The debt/equity […]

Debt to equity ratio measures the ratio of equity versus debt used to finance a company’s operations. It is calculated by dividing total liabilities by net worth, but variations exist. Investors use it to determine risk when buying equity or bonds. Companies monitor it to keep share prices high and may pay off long-term debt […]