Debt equity ratio: external equity/ internal equity or TD/NW
(net wroth)
A high ratio shows that claims of creditors are greater than
those of owners
A low ratio implies greater claims of owners than creditors
debt-equity ratio measures the long term debt and
shareholding equity.
this ratio is calculated below
D/E raio= debt(long term liability)/capital employed
this ratio 2:1 is most preferable.
Debt Equity Ratio is calculated to know the proportion of
Debt and Equity being used to finance the assets of the
company.
If the ratio is greater than one, most of the items are
financed with debt, the company is in risk.
If the ratio is less than one, equity provides majority of
the financing.
When we are using the DEPB licence for duty adjustment 100
%, there is no cash payment to customs. If i am a trader
and registered with excise, Can we avail the modvat credit
and pass on to customers?