Search results
Results from the WOW.Com Content Network
A company's debt-to-equity ratio (D/E) is a financial ratio indicating the relative proportion of shareholders' equity and debt used to finance the company's assets. [1] Closely related to leveraging , the ratio is also known as risk , gearing or leverage .
Debt includes all short-term and long-term obligations. Total capital includes the company's debt and shareholders' equity, which includes common stock, preferred stock, minority interest and net debt. Calculated as: Debt-To-Capital Ratio = Debt / (Shareholder's Equity + Debt) Companies can finance their operations through either debt or equity.
It can be calculated as the sum of interest-bearing debt and equity or as the sum of net assets less non-interest-bearing current liabilities (NIBCLs). The capital charge is the cash flow required to compensate investors for the riskiness of the business given the amount of economic capital invested.
The total-debt-to-total-assets ratio or assets to liabilities ratio, is used to measure a company's performance. Here's how to calculate and why it matters.
The nominal interest rate, which refers to the price before adjustment to inflation, is the one visible to the consumer (that is, the interest tagged in a loan contract, credit card statement, etc.). Nominal interest is composed of the real interest rate plus inflation, among other factors. An approximate formula for the nominal interest is:
For detailed information on the valuation process see Valuation (finance).. Enterprise value = common equity at market value (this line item is also known as "market cap") + debt at market value (here debt refers to interest-bearing liabilities, both long-term and short-term)
Net interest income (NII) is the difference between revenue created by interest-bearing assets and interest payments on liabilities. Put more simply, NII is how much money a bank generates through ...
The debt service coverage ratio is the ratio of income available to the amount of debt service due (including both interest and principal amortization, if any). The higher the debt service coverage ratio, the more income is available to pay debt service, and the easier and lower-cost it will be for a borrower to obtain financing.