Balance Sheets
This balance sheet section represents what a company owns.
What are Assets
This formula is used to calculate the debt-to-equity ratio.
What is total liabilities divided by shareholders’ equity?
A high debt-to-equity ratio generally indicates higher financial this.
What is Risk
This industry often has higher debt-to-equity ratios because of expensive infrastructure.
What are utility companies?
This industry typically has some of the lowest debt-to-equity ratios due to high cash reserves.
What is the technology industry?
Money a company owes to lenders and creditors is called this.
What are liabilities
If a company has $200,000 in debt and $100,000 in equity, this is its debt-to-equity ratio.
2.0
Investors may view companies with low debt-to-equity ratios as more this.
What is financially stable?
Technology companies often have lower debt because they rely more on this source of financing.
What is equity financing?
This industry often carries high debt because buildings and property are expensive.
What is real estate?
This is calculated by subtracting liabilities from assets.
What is shareholders’ equity
A debt-to-equity ratio below 1 usually means the company has more of this than debt.
Equity
Companies often borrow money to achieve this business goal faster.
What is Growth
A rapidly growing startup may accept higher debt levels in order to do this.
What is expand quickly?
Manufacturing companies may take on debt to purchase this type of equipment.
What is machinery?
Loans due after one year are classified as this type of liability.
What are long-term liabilities?
If liabilities increase while equity stays the same, the debt-to-equity ratio will do this.
Increase
A ratio of 0 means the company has no this.
What is debt
Banks closely monitor this ratio before approving business loans.
What is the debt-to-equity ratio?
Utility companies can usually handle higher debt because of this type of steady income.
What is predictable revenue?
Profits kept in the business instead of paid as dividends are called these.
What are retained earnings
This financial statement provides the numbers needed to calculate the debt-to-equity ratio.
What is a Balance Sheet
This term describes a company’s use of borrowed money to finance operations.
What is leverage?
Comparing debt-to-equity ratios is most useful when companies are in the same this.
What is Industry
Comparing a bank’s debt-to-equity ratio to a software company’s can be misleading because of these.
What are industry differences?