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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 .
LONDON -- Before I decide whether to buy a company's shares, I always like to look at two core financial ratios -- return on equity and net gearing. These two ratios provide an indication of how ...
Financial ratios are categorized according to the financial aspect of the business which the ratio measures. Profitability ratios measure the firm's use of its assets and control of its expenses to generate an acceptable rate of return. [2] Liquidity ratios measure the availability of cash to pay debt. [3]
Various leverage or gearing ratios are closely watched by financial analysts to assess the amount of debt in a company's capital structure. [4] [5] The Miller and Modigliani theorem argues that the market value of a firm is unaffected by a change in its capital structure. This school of thought is generally viewed as a purely theoretical result ...
Diageo's net gearing is twice that of SABMiller, but the firm's five-year average ROE is 3.25 times that of SABMiller. However, although Diageo's earnings per share have risen by an impressive ...
LONDON -- Before I decide whether to buy a company's shares, I always like to look at two core financial ratios -- return on equity and net gearing. These two ratios provide an indication of how ...
An entity's debt-to-equity funding is sometimes expressed as a ratio. For example, a gearing ratio of 1.5:1 means that for every $1 of equity the entity has $1.5 of debt. A high gearing ratio can create problems for: creditors, which bear the solvency risk of the company, and; revenue authorities, which are concerned about excessive interest ...
LONDON -- Before I decide whether to buy a company's shares, I always like to look at two core financial ratios -- return on equity and net gearing. These two ratios provide an indication of how ...