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Bank Promotion Exams |
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Debt to Equity Ratio The debt to equity ratio shows the percentage of company financing that comes from creditors and investors. A higher debt to equity ratio indicates that more creditor financing (bank loans) is used than investor financing (shareholders). The debt to equity ratio is calculated by dividing total liabilities by total equity Formula Debt to Equity Ratio = Total Liabilities / Total Equity Example 2: A company has 1,00,000 of bank lines of credit and a 5,00,000 mortgage on its property. The shareholders of the company have invested 12,00,000. Calculate the debt to equity ratio. DER = TL / Total Equity .................................
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