Explanation of Equity Ratio & Debt Ratio #finance #ratio

Explanation of Equity Ratio & Debt Ratio #finance #ratio

The Equity Ratio and Debt Ratio are important leverage ratios used to analyze a company’s capital structure and financial stability.
The Equity Ratio shows the proportion of total assets financed by shareholders’ equity. A higher equity ratio indicates strong financial stability, lower financial risk, and greater ability to absorb losses.
The Debt Ratio measures the portion of total assets financed through debt. A higher debt ratio means the company relies more on borrowed funds, which can increase returns but also raises financial risk.
Together, these ratios help investors, lenders, and students understand a firm’s solvency, risk level, and long-term financial health.

Видео Explanation of Equity Ratio & Debt Ratio #finance #ratio канала Money and Taxes