Concept Introduction:
The debt equity ratio is a type of financial leverage ratio which is also termed as capital gearing ratio which determines the proportion of shareholder equity and debt which is used to finance the company. It is calculated by dividing company total liabilities by shareholder equity.
It shows the percentage of finance of company that comes from investors. Higher debt equity ratio indicates that more creditor financing is used in the company than shareholder financing.
Requirement 1:
We have to determine the maximum amount that can be borrowed from bank.
Concept Introduction:
The debt equity ratio is a type of financial leverage ratio which is also termed as capital gearing ratio which determines the proportion of shareholder equity and debt which is used to finance the company. It is calculated by dividing company total liabilities by shareholder equity.
It shows the percentage of finance of company that comes from investors. Higher debt equity ratio indicates that more creditor financing is used in the company than shareholder financing.
Requirement 2:
We have to determine the percentage of asset financed by debt and equity
Concept Introduction:
The debt equity ratio is a type of financial leverage ratio which is also termed as capital gearing ratio which determines the proportion of shareholder equity and debt which is used to finance the company. It is calculated by dividing company total liabilities by shareholder equity.
It shows the percentage of finance of company that comes from investors. Higher debt equity ratio indicates that more creditor financing is used in the company than shareholder financing.
Requirement 3:
We have to determine the factors while borrowings funds.
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Chapter 14 Solutions
Fundamental Accounting Principles
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