B.S.Omkareshwar (CA-Final Student) (217 Points)
23 March 2015
CA CS Sweta Solanki
(CA, CS)
(167 Points)
Replied 24 March 2015
Debt Equity Ratio = Debt / Equity
Debt Ratio = Debt / Debt + Equity
So use it respectively.
Amit Kumar Bansal
(Job/Blogger)
(688 Points)
Replied 11 April 2018
For most companies, the maximum acceptable debt-to-equity ratio is 1.5-2 and less. For large public companies the debt-to-equity ratio may be much more than 2, but for most small and medium companies it is not acceptable.
High debt ratio clearly indicated that the company unable to generate enough cash to satisfied the debt.
Every company works on their own business model within the same industry, If you keep an eye on the reduction of debt with the same circumstances to the company with same industry, that means the company is working better then the other company in the sector.
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