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Making smart financial decisions requires understanding a few key numbers. One of the most important factors is the debt-to-equity ratio, which is the D/E ratio. This number can tell you a lot about a company's finances and how it manages its money. Whether you are someone considering where to invest your money or a business owner trying to improve your operations, this number is important. In this guide, Exness will explain important points about the D/E ratio to help you make better financial decisions. Concept Of Debt And Equity Chi-so-de-la-gi-1Before learning about debt-to-equity ratio, let's distinguish the main difference in corporate finance: debt and equity. Debt is money borrowed by a person or company and needs to be paid back at some point. Banks or other financial institutions are sometimes willing to lend money in exchange for the interest they charge borrowers. Companies often borrow to get what they need to run their business, including human, financial, and capital assets. Debt can come in many different forms: Bank loansSecured and unsecured business loansBondsEquipment loanEquity, also known as shareholders' equity, indicates the amount of value that shareholders own outright, even after accounting for the amount of money the company owes. Equity is the amount that will be returned to stakeholders in the event of liquidation of assets and when debts are paid off. Equity is calculated by subtracting total liabilities from total assets. Equity represents the value of an investor's shares in a company. This is an important financial measure that evaluates how much money a company holds in addition to debt and assets. For example: Homeowners have equity when the home they own is worth more than the debt on the home. If the home equity is worth $300,000 and the mortgage is $120,000, the homeowner has $180,000 in home equity. What is Debt to Equity Ratio?<img src="https://images.ctfassets.net/fawq95y6n8yp/1ax81Y3Yr3ndhHR91tTBug/40a617140168d130f3bb5622e714f489/Chi-so-de-la-gi-1.jpg?w=1280&amp;h=865&amp;fl=progressive&amp;q=85&amp;fm=jpg">Chi-so-de-la-gi-2The D/E ratio is a financial metric that measures a company's debt ratio relative to shareholder equity. It represents how a company finances its assets. Besides, this index provides insight into a company's debt levels, indicating whether the company uses more debt or equity to run its operations. A higher ratio indicates the company uses more borrowed money, which comes with interest and debt repayment obligations. Conversely, a lower ratio indicates the company is primarily using equity capital, which does not require repayment but may dilute ownership. What is the Debt-to-Equity Ratio Formula? Chi-so-de-la-gi-3The formula to calculate the D/E index is relatively simple: D/E ratio = Total liabilities / Total shareholders' equity Here, “Total Liabilities” includes both short-term and long-term debt, while “Total Shareholders' Equity” refers to the ownership interest in the company. How to Calculate Debt to Equity Ratio? Chi-so-de-la-gi-4While the formula itself is simple, understanding its components can provide greater insight into a company's financial health. Below are the detailed steps: Step 1: Determine total debt The first step involves determining the company's total debt. This includes both short-term debt and long-term debt. Here's how you can find these numbers: Short-term debt: These are debts due within one year, including accounts payable, short-term loans, and other short-term liabilities.Long-term debt: These are debts that are due more than one year from the balance sheet date and can include long-term loans, bonds payable, and lease obligations.For example: Short-term debt: $50,000 Long-term debt: $100,000 Total debt = Short-term debt + Long-term debt Total debt = $50,000 + $100,000 = $150,000 Step 2: Determine total shareholders' equity The next step is to determine the company's total equity. This number represents the remaining interest in the company's assets after deducting its liabilities. For example: Common stock: $30,000 Retained earnings: $70,000 Total shareholders' equity = Common stock + Retained earnings Total shareholders' equity = $30,000 + $70,000 = $100,000 Step 3: Calculate the debt-to-equity ratio Once you have determined both total debt and total equity, you can now calculate the D/E ratio using the same formula we explored above: Debt to equity ratio = Total debt / Total shareholders' equity For example: D/E = $150,000 / $100,000 = 1.5 A D/E ratio of 1.5 shows that the company has 1.5 times more debt than equity, signaling a moderate level of financial leverage. What Does Debt-to-Equity Ratio Tell Us? Chi-so-de-la-gi-5The D/E ratio is a strong indicator of a company's financial stability and risk profile. It reflects the relative proportions of debt and equity that a company uses to finance its business

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Doanh nghiệp Nhật Bản lo lợi nhuận giảm vì đồng yen tăng giá

Mỹ điều tra hàng loạt ngân hàng lớn

VietinBank tiếp tục là Ngân hàng cung cấp dịch vụ ngoại hối tốt nhất Việt Nam

Ngân hàng nhà nước: ổn định tỉ giá

Chỉ Số D/E Là Gì? Tỷ Lệ Nợ Trên Vốn Chủ Sở Hữu Cho Chúng Ta Biết Điều Gì?