DEBT TO EQUITY measures the risk of the firms capital structure in terms of amounts of capital contributed by creditors and that contributed by owners. It expresses the protection provided by owners for the creditors. In addition, low Debt/Equity ratio implies ability to borrow. While using debt implies risk (required interest payments must be paid), it also introduces the potential for increased benefits to the firms owners. When debt is used successfully (operating earnings exceeding interest charges) the returns to shareholders are magnified through financial leverage. Depending on the industry, different ratios are acceptable. The company should be compared to the industry, but, generally, a 3:1 ratio is a general benchmark. Should a company have debt-to-equity ratio that exceeds this number; it will be a major impediment to obtaining additional financing. If the ratio is suspect and you find the companys working capital, and current / quick ratios drastically low, this is a sign of serious financial weakness. Formula: Total Liabilities / Stockholders Equity
INSTALLATION is 1. the act of installing something (as equipment) or, 2. a building or place that provides a particular service or is used for a particular industry.
BED and BREAKFAST was an overnight UK tax related maneuver intended to establish a tax loss benefit. Now no longer allowed.
Enter a term, then click the entry you would like to view.