The Debt-equity ratio reveals if the company has a great amount of debt in its capital structure.

Large debts mean that the borrower has to pay significant pariodic interest and principal. Moreover a heavily indebtd company takes normally a greater risk of running out of cash in difficult times. So that, tn other words, the DEBT EQUITY ratio, it indicates the entire debt ratio of the company but its interpretation depends on several other variables, including the ratios of other companies in the competitive sector segment or in the comapny's industry like the degree of access to additional debt financing and the stability of the company's operation.

It is a measure of financial risk of the debt’s company structure itself. This indicator measures the overall level of debt of the company in percentage terms. It is also called "leverage ratio" and the value is the ratio of total liabilities (current liabilities and long term liabilities) divided capital (or net equity).

 

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