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Anirudh Gupta
CA Aspirant|Content ...ย โขย 2m
Daily dose of financial ratios by Anirudh Gupta Debt/equity ratio =Total debt/Shareholders equity Purpose: It helps users of financial statements understand how much debt the company is using for every โน1 of equity invested by shareholders. Creditors can understand whether -the company is financially stable and -to evaluate the companyโs ability to repay debts and cover their interest expenses. Investors can decide -whether the start-up is either more debt funded or equity funded. -(Investors are always willing to put their money in a equity funded company) Ideal Ratio: Less than or upto 1, -is a preferable financial ratio -Investors and creditors=Mein khush hun bhaai,achase dhandha karo๐ More than 1, -not preferable ratio -High risk, indicates more debt is being used to maintain operations -Investors and creditors=Who are you bhaai๐๐ปโโ๏ธ๐๐ปโโ๏ธ -May cast their doubts on the companyโs well being and consider pulling back their money. Learning Each ratio a day, makes you financially brave. Follow for more!
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