|
|
Total Stockholder's Equity
|
| Equity to Total Debt =
|
|
|
|
Short-Term Debt + Long-Term Debt
|
Explanation of Equity to Total Debt:
The Equity to Total Debt ratio measures how much debt the company can have and
still be able to meet debt obligations with its equity.
Importance of Equity to Total Debt:
A high, or increasing Equity to Total debt ratio is usually a
positive sign, showing the company is better able to cover its debt. A
value of 1.0 means the company has just enough equity to cover its debt
(the company is barely solvent), but a value of 2.0 or greater value is
desired.
|