If we have 2 companies, let's say company X and Y with debt to equity ratio 1:1 and 2:1 which company has a better debt to equity ratio and why?

Question

Amr Ibrahim · Answer

the first is the better, as the latter has a debt burden at double of its capital which causes high ris to the business, i.e bankruptcy

Muhammad Hussain · Answer

by keeping in view liquidity of the firm, company x is in a better position as compared to company y

Gayasuddin Mohammed · Answer

X which has1:1 ratio has a better debt to equity ratio than compared with the other has2:1. Thanks.