Financial Ratios


Debt Ratios

Debt Ratio TotalLiabilitiesTotalAssets\dfrac{Total Liabilities}{Total Assets} - The debt ratio tells us the degree of leverage used by the company.
Debt Equity Ratio TotalDebtTotalEquity\dfrac{Total Debt}{Total Equity} - This is a measurement of the percentage of the company’s balance sheet that is financed by suppliers, lenders, creditors and obligors versus what the shareholders have committed.
Long-term Debt to Capitalization LongTermDebtLongTermDebt+ShareholdersEquity\dfrac{Long−Term Debt}{Long−Term Debt + Shareholders Equity} - While a high capitalization ratio can increase the return on equity because of the tax shield of debt, a higher proportion of debt increases the risk of bankruptcy for a company.
Total Debt to Capitalization TotalDebtTotalDebt+ShareholdersEquity\dfrac{Total Debt}{Total Debt + Shareholders Equity} - Capitalization ratio describes to investors the extent to which a company is using debt to fund its business and expansion plans.
Interest Coverage Ratio EBITInterestExpense\dfrac{EBIT}{Interest Expense} - The lower a company’s interest coverage ratio is, the more its debt expenses burden the company.
Cash Flow to Debt Ratio OperatingCashFlowsTotalDebt\dfrac{Operating Cash Flows}{Total Debt} - The cash flow to debt ratio reveals the ability of a business to support its debt obligations from its operating cash flows.
Company Equity Multiplier TotalAssetsTotalEquity\dfrac{Total Assets}{Total Equity} - This is a measure of financial leverage.