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Debt-to-Equity Ratio:
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Data Source and Methodology
This calculator is based on standard financial formulas as described in BDC's resources. All calculations are strictly based on these formulas and data.
The Formula Explained
\[
\text{Debt-to-Equity Ratio} = \frac{\text{Total Debt}}{\text{Total Equity}}
\]
Glossary of Terms
- Total Debt: The sum of all debts a company owes.
- Total Equity: The total assets minus total liabilities of a company.
Frequently Asked Questions (FAQ)
What is the Debt-to-Equity Ratio?
It is a financial ratio indicating the relative proportion of shareholders' equity and debt used to finance a company's assets.
Why is it important?
The ratio provides insights into the financial leverage of a company, which can impact its risk and return.
What is a good Debt-to-Equity Ratio?
Typically, a lower ratio is considered better as it indicates less risk, but this can vary by industry.
How often should I calculate this ratio?
It's recommended to review it quarterly or whenever there are significant financial changes in the company.
How does this ratio affect investors?
Investors use this ratio to gauge the financial health and risk level of a company.