A Refresher on Debt-to-Equity Ratio: Which best explains why banking institutions start thinking about interest on loans

A Refresher on Debt-to-Equity Ratio: Which best explains why banking institutions start thinking about interest on loans

When individuals hear “debt” they generally consider one thing to prevent — bank card bills and high passions prices, perhaps also bankruptcy. But whenever you’re owning company, financial obligation is not all bad. In reality, analysts and investors want organizations to smartly use debt to finance their companies.

That’s where in actuality the debt-to-equity ratio is available in. We chatted with Joe Knight, composer of the HBR TOOLS: return on the investment and cofounder and owner of www. Business-literacy.com, to find out more about this monetary term and exactly just exactly how it is utilized by organizations, bankers, and investors.

What’s the debt-to-equity ratio?

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