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Total liabilities divided by total assets.

This ratio is used to identify the financial leverage of the company i.e. to identify the degree to which the firm's activities are funded by the owners money versus the money borrowed from creditors.

The higher a company's degree of leverage, the more the company is considered risky.

Formula:

DER = Net Debt / Equity

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โˆ™ 2011-10-13 09:12:11
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Q: What is debt-to-equity ratio?
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