Total Liabilities Shareholders Equity .
Indicates what proportion of equity and debt that the company is using to finance its assets. Sometimes investors only …use long term debt instead of total liabilities for a more stringent test. .
Things to remember .
A ratio greater than one means assets are mainly financed with debt, less than one means equity provides a majority of the financing. .
If the ratio is high (financed more with debt) then the company is in a risky position - especially if interest rates are on the rise. .
Asset Beta measures the inherent riskiness of the underlying assets with respect to the market. The equity and debt only affect the inherent riskiness of the firm, but the add…itional debt has no influence on the underlying riskiness of the assets.For instance, if you are in the hotel business, why should the amount of debt you have affect your ability to get visitors stay at your hotel?\n.
\nhigh debt does, however, affect the underlying riskiness of the equity (it is riskier to hold shares of a firm with large amounts of debt). therefore, the equity beta does change. (MORE)
What is given is: total assets = $422,235,811.
Debt ratio = 29.5%.
Find: debt-to-equity ratio.
Debt-to-equity ratio = total debt / total equity.
Total… debt ratio = total debt / total assets.
Total debt = total debt ratio x total assets.
= 0.295 x 422,235,811.
Total assets = total equity + total debt.
Total equity = total assets - total debt.
= 422,235,811 - 124,559,564.2.
Debt-to-equity ratio = total debt / total equity.
= 124,559,564.2 / 297,676,246.8.
Equity multiplier = total assets / total equity.
= 422,235,811 / 297,676,246.8.
= 1.418 (MORE)
Sum of all liabilities divided by sum of equity. E.g.: A company owes Â£150,000 as a bank loan, and has a share capital of Â£1,000,000. The debt/equity ratio is 15 …per cent. This ratio is also known as "gearing" or "leverage". (MORE)
Bank capital to assets is the ratio of bank capital and reserves to total assets. Capital and reserves include funds contributed by owners, retained earnings, general and spec…ial reserves, provisions, and valuation adjustments. Capital includes tier 1 capital (paid-up shares and common stock), which is a common feature in all countries' banking systems, and total regulatory capital, which includes several specified types of subordinated debt instruments that need not be repaid if the funds are required to maintain minimum capital levels (these comprise tier 2 and tier 3 capital). Total assets include all nonfinancial and financial assets. (MORE)
Answer: Return on total assets (ROA) equals net income divided by total assets. It is a measure of performance, because the amount that is earned with the assets is divided b…y the value of the assets (investments). Alternative Instead of dividing net income by assets, often the interest expense is added back to net income. An alternative measure is thefore: ROA = NOPAT / total assets where NOPAT is net operating profit after tax, which is computed as net income plus the interest expense x ( 1 - tax rate). NOPAT shows the profitability of all assets (excluding the cost of financing), but including the 'tax shield' on the interest expense (because interest expense is tax deductable). This is considered to be more precise than dividing net income by assets. Return on equity Return on equity is a similar ratio, where net income is divided by shareholders' equity. It shows the percentage return that the company has made on its equity. (MORE)
Basically there is no absolute plug number. It differs from one firm to another. Say for instance: a starting fast growth High-tech firm normally will have higher ratio than …a mature profitable one. The same goes from industry to industry: transportation VS pharmaceuticals. Conclusion: each firms has its own unique dept ratio, but what matter is, how efficient the dept is managed. (MORE)
This ratio represents the structure of assets and the amount in form of current assets per each pound invested in assets. Current assets are important to businesses because th…ey are the assets that are used to fund day-to-day operations and pay on-going expenses and include cash, accounts receivable, inventory, marketable securities, prepaid expenses and other liquid assets that can be readily converted to cash. (MORE)
Fixed assets to total assets ratio describe about the percentage ornumber of time fixed assets are of total assets. It helps themanagement to find out that either they are mai…ntaining properfixed assets and current assets ratio or there may be any changesrequired in the ratio which is to be maintained because if theymaintain high ratio it will affect the depreciation expense andultimately net income as well. (MORE)
Return on assets is Net income/ total assets. Hence to arrive at net income we should ascertain total assets first, as the return on assets is provided at 8.7%. Total assets …is sum of Equity plus Debt plus Other liabilities. We have total equity at USD 520000. Hence debt can be ascertained from the Debt Equity ratio at 1.40. But what about other liabilities? As it is not provided we will not be able to compute total assets and hence net income from the given particulars. (MORE)