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Total Liabilities
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| Debt to Equity Ratio =
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Total Stockholder's Equity
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Explanation of Debt to Equity Ratio:
The Debt to Equity Ratio compares the company's dollar
amount owed to creditors (Total Liabilities) to the dollar amount supplied by
investors of the company (Total Stockholder's Equity).
Importance of Debt to Equity Ratio:
The higher the amount of Total Liabilities, the more risky this
company becomes. If the company went bankrupt, the creditors would be
paid before the stockholders. Plus the more equity the stockholder's
provide, the better protected the creditors are and the more attractive the
financial position of this company becomes.
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