Ideal Debt Equity Ratio

Debt Equity ratio is perhaps the most important ratio when it comes to checking the creditworthiness of a company, it is calculated as Debt/ Equity. Banks give particular emphasis on this ratio when they have to decide whether to approve a loan or not to a company.

An ideal debt equity ratio for most of the companies is .50 that is for every 2 dollars of equity a company has 1 dollar of debt. However above ratio varies from industry to industry because some industries require more debt than others and therefore debt equity ratio of .50 is not ideal for such industries.

1 comment… add one
  • Akshay Kumar

    Can I know what is the ideal debt equity ratio for the banking industry in india….?

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