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2 cards from this section. Quick, good the night before a test.
What is the formula for the Debt-Equity Ratio?
What two financial components does this ratio compare?
What is considered an ideal Debt-Equity Ratio?
Think about equal proportions of debt and equity.
What is the formula for the Debt-Equity Ratio?
Think about what two elements of capital are compared.
True or false: A Debt-Equity Ratio higher than 1 indicates a company is less risky.
Consider what high debt means for a company.
A company has long-term debts of ₹150,000 and shareholders' equity of ₹100,000. Calculate the Debt-Equity Ratio and discuss its implications.
What does a ratio greater than 1 signify?
Analyze the effect on the Debt-Equity Ratio if a company pays off ₹30,000 of its long-term debt while having ₹120,000 in shareholders’ equity.
How does reducing debt affect the ratio?
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