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Can you explain the significance of calculating debt- equity ratio?

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Question added by Frank Mwansa , ACCOUNTING LECTURER , FREELANCER
Date Posted: 2016/05/05
Deleted user
by Deleted user

It provides the proportion of liabilities supplied by the creditors versus the stock holders.

Ahsas Ali
by Ahsas Ali , Senior Accountant , Elemeco Contractors

Generally debt - equity ratio evaluate the risk factor for repayment to provider of fund for the particular organization.

it describes the proportion/ ratios of owner's capital (equity) and external liabilities (debt).

Normally it should be 2:1

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