DEBT TO EQUITY RATIO

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Debt-to-equity ratio is a financial ratio that compares a company's total debt to its total equity.

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It measures the proportion of a company's financing that comes from debt versus equity.

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Debt includes all liabilities that a company owes, such as loans, bonds, and other forms of debt.

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Equity represents the ownership stake in a company & includes shareholders' equity, retained earnings, & other equity instruments.

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The debt-to-equity ratio is calculated by dividing the total debt by the total equity of the company.

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A high debt-to-equity ratio indicates that a company has more debt than equity, which can be a sign of financial risk.

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A low debt-to-equity ratio, on the other hand, indicates that a company has more equity than debt, which is generally considered a good sign.

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The ideal debt-to-equity ratio varies by industry and company, but a general rule of thumb is that a ratio of 2:1 or lower is desirable.

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A high debt-to-equity ratio may indicate that a company is having difficulty paying off its debt, which can lead to bankruptcy or financial distress.

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Debt-to-equity ratio helps investors evaluate company's financial health & ability to pay off debts, make investments, & generate profits in long term.

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