Question

How is the debt-to-equity ratio computed? What does the debt-to-equity ratio tell you?

Answer 1

The debt-to-equity ratio is computed by dividing a company's total liabilities by its shareholder equity.

The debt-to-equity (D/E) ratio shows the proportion of equity and debt a company is using to finance its assets. The D/E ratio signals the extent to which shareholder's equity can fulfill obligations to creditors, in the event of a business decline.

The debt-to-equity ratio (D/E) is a financial ratio indicating the relative percentage of shareholders' equity and debt used to finance an enterprise's property. intently related to leveraging, the ratio is likewise referred to as danger, gearing, or leverage. the 2 components are often taken from the employer's stability sheet or declaration of financial characteristic (so-referred to as e-book fee), but the ratio can also be calculated the use of marketplace values for each, if the agency's debt and fairness are publicly traded, or using a mixture of fee for debt and marketplace fee for fairness financing.

The debt-to-equity ratio measures your organization's fashionable debt relative to the quantity at the start invested through the proprietors and the income that has been retained through the years.

Learn more about debt-to-equity here: brainly.com/question/27993089

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