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- The debt to equity ratio is an important tool used in financial analysis to examine the health of a company12. The importance of the debt to equity ratio includes12:
- It is a prevalent ratio regarding solvency.
- It is the first ratio that comes to mind when an investor wants to know a company’s solvency.
- It helps the investor understand the immediate stance of the company and can understand the company’s long-term future.
- A high debt to equity ratio is an indication of low liquidity.
Learn more:✕This summary was generated using AI based on multiple online sources. To view the original source information, use the "Learn more" links.Importance
- The debt to equity ratio analysis is a prevalent ratio regarding solvency.
- If an investor wants to know a company’s solvency, equity debt would be the first ratio to cross her mind.
www.wallstreetmojo.com/debt-to-equity-ratio/A list of points explaining the importance of the debt/equity ratio is mentioned below: Debt to equity ratio is an important tool used in financial analysis to enable potential investors to examine the health of a company. A high debt to equity ratio is an indication of low liquidity.
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