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™ |
|---|---|---|---|
| NMQ:RDUS | Radius Health Inc | -139876.12 | 13 |
| NSQ:AAL | American Airlines Inc | -99050 | 54 |
| NYQ:LW | Lamb Weston Holdings Inc | -49569.57 | 74 |
| NSI:CANDC | C & C Constructions | -47836.26 | 53 |
| NYQ:TLRD | Tailored Brands Inc | -28452.69 | 58 |
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.
