Debt-Equty Ratio

1025 views 5 replies

What is the importance of Debt-Equity Ratio for a Company?

Replies (5)

There are too many perspectives in this regard.

Debt-Equity ratio explains the financial strength of the organisation, as given below :-

If Debt-Equity ratio is too high, means co. is employed with too much debt that is to be paid on maturity and also financial risk is too high as co. is charged with fixed burden in the form of INTEREST ON DEBENTURES, LOANS etc.

If it is too low, means equity is too high, the req. of investors would be too high in context of dividend to be paid and also capital gains on sale of share of co.

So, Debt-Equity reatio needs to be balanced. The ideal ratio for this is 1:1.

Thanks a lot! Sir, It is quite satisfactory & informative!

welcome...... always.

sir, I think this calculation good at the time of new company. when a company starts to earn profits and accumulate huge reserve, whether this ratio has any significance

nice one

Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register  

Company
ARTICLESHIP 04 June 2026
Article

Rakhecha & Co.

New Delhi

CA Inter

View Details
Company
ARTICLESHIP 30 June 2026
2 posts Article assistant and Articleship completed students

Chirag N Shah & Associates

Mumbai

CA Inter

View Details
Company
ARTICLESHIP 20 June 2026
Articleship

RB KESHRI & CO

Mumbai

B.Com

View Details
Company
20 June 2026
Assistant Accounts Manager

Fintax Professionals

Gurgaon

CA Inter

View Details
Company
09 June 2026
Accounts Associate

S Madan and CO

New Delhi

Graduate (Any)

View Details
Company
ARTICLESHIP 30 June 2026
Article Assistant or Paid Assistant

VIKAS VERMA & CO

New Delhi

Others

View Details
Company
29 June 2026
Accountant (Finance & Compliance)

TRIEYEZ

Kolkata

CA

View Details
Company
ARTICLESHIP 24 June 2026
CA Article Trainee

Rahul Dang & Associates

Pune

CA Inter

View Details