The debt-equity ratio is determined to ascertain the soundness of the long-term financial policies of the entity. This ratio indicates the proportion between the shareholders’ funds (i.e. Tangible net worth) and the total borrowed funds. Ideal ratio is 1.
debt to equity ratio = total debt/total equity
Debt/Equity=Total Shareholders’ Equity Total Liabilities
In other words, the investor may take debt equity ratio as … Read the rest