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. 

Quick Ratio - Formula

Quick Ratio Formula:

Formula for Quick Ratio

Meaning:

Quick Ratio is the second important liquidity ratio that measures the organisation’s ability to meet immediate obligations on a much stringent method. Here inventories which are slower to realise or convert into cash are eliminated from the current assets.

Example:

Example-Calculation of Quick Ratio of NMDC Ltd.

Desired Number:

The minimum required number for safety is 1. Below one means inadequate safety and any number more than one indicates increased margin of safety.