What is the formula of Debt Equity Ratio? Also define its
importance in a firm.
Answer Posted / saurabh
debt/equity ratio:
debt :(long term debt + short term debt)
equity : (common share + pref share+ reserves and surplus)
it is used to assess the
1)riskiness
2)used by banks to check the existing composition of debt -
should be on the lower side to leave scope for more debt
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