Fundamental Analysis -Part 1
Debt to equity ratio Debt to equity ratio indicates the proportion of debt and equity in the financial structure of the company. Technically, it s used to measure the financial leverage of the company which is obtained by dividing companies total liabilities by the total equity of it. It gives clarity regarding the fund arranged by the company that weather it is by debt or by selling off share of its ownership. Having a debt is not a bad thing for any company but most important thing is that Weather Company is able to generate profit more than pay of interest. Lower debt-to-equity ratio are considered favorable because it indicates less risk in financial structure whereas high debt to equity ratio is unfavorable because it show risk. High debt to equity ratio is considered risky because it means that company relies more on external lenders for capital and at the same time it have to pay high interest rates for it which red...