EBK FUNDAMENTALS OF CORPORATE FINANCE
EBK FUNDAMENTALS OF CORPORATE FINANCE
3rd Edition
ISBN: 9780133762808
Author: Harford
Publisher: PEARSON CUSTOM PUB.(CONSIGNMENT)
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Chapter 2, Problem 11CC
Summary Introduction

Debt-to-Equity-Ratio:

A debt-to-equity-ratio helps to find out a firm’s leverage which shows the extent to which the firm takes debt in order to raise funds for its projects. This ratio indicates that how much debt a firm has taken over the equities as a source of finance. It is calculated by dividing the total liabilities of the firm including the short − term and long − term debts which also contain the debts of current maturity as well, by the value of the total equity that the shareholders own. It is represented as under:

EBK FUNDAMENTALS OF CORPORATE FINANCE, Chapter 2, Problem 11CC

To Identify:

What a high debt-to-equity-ratio signifies.

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EBK FUNDAMENTALS OF CORPORATE FINANCE

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