Debt/equity ratio - Hutchinson encyclopedia article about Debt/equity ratio Printer Friendly
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debt-equity ratio
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   Also found in: Financial, Acronyms 0.03 sec.

debt-equity ratio

Measure used to assess a company's financial health. The ratio is calculated by dividing the company's long-term debt (capital contributed by creditors) by the shareholders' equity (contributed by owners). The result is often referred to as gearing. A highly geared company has a high proportion of debt in relation to its equity. In the USA, gearing is known as leverage.


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Although the debt/equity ratio is an indicator of a farm's prospects, Christensen hesitates to cite a threshold level.
The debt/equity ratio allows you to determine whether the business is overburdened with debt.
The rather generous German thin capitalization rules (which allow a 9:1 debt/equity ratio for holding companies and a 3:1 debt/equity ratio for operating companies), along with an absence of limits for partnership financing, may make it possible to inject substantial acquisition debt into Germany by using a German acquisition vehicle.
 
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