Friday, September 23, 2016

Debt Equity Ratio - Formula

Debt Equity Ratio Formula:

Debt Equity Ratio Formula

Meaning:

Debt Equity Ratio measures the firm's ability to meet its long-term obligations on time, by comparing with the firm's own money or net worth. As a measure of additional safety, value of intangible assets like goodwill and brands are deducted from the net worth.

Example:

Example Calculation of Debt Equity Ratio of NMDC Ltd.

Required Number:

The Debt Equity Ratio must be one or below. Lower the number than one so much stronger the company is and vise-versa. 


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