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Glossary > D > "Debt to equity ratio" Definition

Debt to equity ratio

Net borrowings of a company divided by shareholders" funds. The ratio shows the amount of financing that is provided by sources other than the shareholders.Net borrowings means the total borrowings of the company from banks, other financial institutions, debenture holders and preference shareholders, less any cash that is readily available and any short term cash holdings.Both figures can be found in a company"s balance sheet. The ratio is often multiplied by 100 and expressed as a percentage. The higher the percentage, the more risky for lenders to the company. Most lenders like the percentage to be below 50%. If it is above 100%, the company is said to be highly geared.

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Debt to equity ratio - Net borrowings of a company divided by shareholders" funds. The ratio shows the amount of financing that is provided by sources other than the shareholders.Net borrowings means the total borrowings of the company from banks, other financial institutions, debenture holders and preference shareholders, less any cash that is readily available and any short term cash holdings.Both figures can be found in a company"s balance sheet. The ratio is often multiplied by 100 and expressed as a percentage. The higher the percentage, the more risky for lenders to the company. Most lenders like the percentage to be below 50%. If it is above 100%, the company is said to be highly geared.

Debt to equity ratio : net borrowings of a company divided by shareholders" funds. the ratio shows the amount of financing that is provided by sources other than the shareholders.net borrowings means the total borrowings of the company from banks, other financial institutions, debenture holders and preference shareholders, less any cash that is readily available and any short term cash holdings.both figures can be found in a company"s balance sheet. the ratio is often multiplied by 100 and expressed as a percentage. the higher the percentage, the more risky for lenders to the company. most lenders like the percentage to be below 50%. if it is above 100%, the company is said to be highly geared.