Debt-to-equity ratio is a financial metric that compares a company's total debt to its total equity, indicating the extent to which a company is financed by debt.

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Why is debt-to-equity ratio important?

The debt-to-equity ratio is a crucial financial metric that helps investors and analysts assess a company's financial risk and leverage, influencing investment and lending decisions.

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An easy way to understand debt-to-equity ratio is:

To think of it as a comparison between how much a company owes (debt) and how much it's worth (equity). It shows how reliant a company is on borrowed money.

Debt-To-Equity Ratio Formula

Debt-to-Equity Ratio = Total Liabilities ÷ Total Shareholders' Equity

This ratio compares a company's total debt to its total equity, indicating its financial leverage.

Maintaining a healthy debt-to-equity ratio has been vital in keeping our operations sustainable. By balancing our use of debt with equity, we ensured that we had enough leverage to expand while maintaining enough buffer to reassure investors and maintain financial health, crucial for long-term growth.