Debt to equity ratio? (1 Viewer)

[seano77]

Is it Total liabilities over Owner's Equity or Non-current liabilities over OE? Two textbooks. Two options. Which one?

 

[m&ss2008]

Is it Total liabilities over Owner's Equity or Non-current liabilities over OE? Two textbooks. Two options. Which one?

total liabilities over owner's equity.

think of it as external liabitities/owner's equity.

makes it easier sometimes

 

[michael1990]

There is a lot of different fomulas when it comes to business and different textbooks.

It sucks. But i suppose they would except any in the HSC.
Just use the one you know you will remember.

 

[Seza16]

along the lines of the debt to equity ratio...my trial business studies exam is in two days and I don't understand any of the financial management can someone help...

my email is floating around somewhere in the global business...
Thank you...

 

[michael1990]

along the lines of the debt to equity ratio...my trial business studies exam is in two days and I don't understand any of the financial management can someone help...

my email is floating around somewhere in the global business...
Thank you...

The financial Planning and Management is my favourite topic.

What do you need help with?
Just shoot me a PM and i will be happy to help you mate.

 

[bound4uni]

A measure of a company's financial leverage calculated by dividing its total liabilities by owners equity. It indicates what proportion of equity and debt the company is using to finance its assets.

Debt to equity Ratio= Total liabilities/Owners equity

Note: Sometimes only interest-bearing, long-term debt is used instead of total liabilities in the calculation.

To clarify, only use non-current (interest bearing) liabilities if the question specifically requires it but if in doubt just use total liabilities.

hope that helps

 

[Seza16]

Yeah does anyone know how to explain how you read a balance sheet... ANd finacial forecast...

It's all too confusing...for me.

 

[ogilvie1]

It's Total Liabilities / Owners Equity! Represents how much of the business is funded by external debt compared to internal debt. The higher the ratio, the more highly geared the business is and so therefore is more susceptible to outside influences such as interest rate rises, etc.

 

[ogilvie1]

Seza16 - not sure what you mean by "read' a Balance sheet. However, know your ratios and extract that info from the Bal Sheet - this will get you part of the way. Generally questions on Financial management require you to not only CALCULATE ratios but then to INTERPRET them! Any General maths student should be able to calculate - more marks for those who can interpret the ratios!! Know the Financial Managemnet sections of your text!

 

[imqt]

guys urgent question

in some hsc questions they ask for gearing ration
which do you use? total liabilties over total asset or TL/OE ???
we learnt to use the first one generally and i dont known which one to use if you are asked to compare to industry standard if they dont specifiy a specific ratio?

 

[Roga]

guys urgent question

in some hsc questions they ask for gearing ration
which do you use? total liabilties over total asset or TL/OE ???
we learnt to use the first one generally and i dont known which one to use if you are asked to compare to industry standard if they dont specifiy a specific ratio?

The gearing ratio is Long-term debt/Shareholder's equity. I think what you're talking about is Current Assets/Current Liabilities? Which is the current ratio.