The ratio is calculated by taking the company's long-term debt and dividing it by the book value of common equity. The greater a company's leverage, the higher the ratio. Generally, companies with higher ratios are thought to be more risky.
A high ratio usually indicates a higher degree of business risk because the company must meet principal and interest on its obligations. Potential creditors are reluctant to give financing to a company with a high debt position. However, the magnitude of debt depends on the type of business. For example, a bank may have a high debt ratio but its assets are generally liquid. A utility can afford a higher ratio than a manufacturer because its earnings are more stable.
| Ticker | Name | LT Debt / Equity % | StockRank™ |
|---|---|---|---|
| ASX:ENA | Ensurance | -331234.62 | 3 |
| NAQ:JASN | Jason Industries Inc | -96818.66 | 75 |
| NSI:CANDC | C & C Constructions | -47836.26 | 46 |
| OTC:TRCK | Track Inc | -35475.6 | 77 |
| OTC:PRLE | Pillarstone Capital REIT | -28498.63 | 86 |
Let’s get you setup so you get the most out of our service
Brilliant - You've created a folio! Now let's add some stocks to it.
