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Debt Equity Ratio

The Debt Equity Ratio is used to calculate the leverage of a company and is expressed as a Multiple.

The calculation of a Company’s Financial Leverage can be done by the Debt / Equity Ratio. The Ratio is calculated via the Liabilities side of the Balance Sheet and divides Total Long-Term Debt / Shareholders Equity. The purpose of the Ratio is to determine the level of coverage of Long-Term Debt by Shareholders Funds. For example, if the Ratio is 1.3x and Shareholders Equity is $200 million, the Debt will be $260 million. An appropriate level of Financial Leverage is determined on a company-by-company and sector-by-sector basis.

Accounting
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Meet the author behind Smartest-Data. Warren William has a career in Finance and Investments extending over 35 years, both on the Buy Side and Sell Side. His most recent roles include, developing Institutional Risk Management Programs for managing Equity and Fixed Income Risk.  Prior to this Warren William work in Alternative Investments, in Investment Management and as a Buy Side Equity Analyst. Warren William brings a wealth of knowledge and expertise to the table, providing in-depth analysis and commentary on the latest trends in the Stock Markets. Contact information: wwBLOG@smartest-data.blog or Telegram +393339034488

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