Debt Equity Ratio
Liabilities Equity ratio refers to the relationship between liabilities and owners' equity (stockholders' equity). ratio 。 Under the broad sense of capital structure, the ratio of liabilities to equity refers to the ratio between the total liabilities of an enterprise and the owner's equity (stockholder's equity), also known as the property right ratio. In the narrow sense of capital structure, the ratio of liabilities to equity refers to the ratio between long-term liabilities and owners' equity (stockholders' equity).
Calculation of debt equity ratio
Debt equity ratio = Total Liabilities / shareholders
Equity
The total amount of liabilities and interests reflects the strength of the financial structure of the audited entity, as well as the extent of the creditor's capital being protected by the owners' rights and interests. The high ratio of debt to equity indicates that the total capital of the audited unit is high in debt capital, so the degree of protection of debt capital is relatively weak. The low ratio of debt to equity indicates that the financial strength of the audited entity itself is strong, so the degree of protection of debt capital is relatively high.
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