Is 0.1 a good debt-to-equity ratio? (2024)

Is 0.1 a good debt-to-equity ratio?

Debt-to-equity ratio values tend to land between 0.1 (almost no debt relative to equity) and 0.9 (very high levels of debt relative to equity). Most companies aim for a ratio between these two extremes, both for reasons of economic sustainability and to attract investors or lenders.

What is a 0.1 debt ratio?

For instance, with the debt-to-equity ratio — arguably the most prominent financial leverage equation — you want your ratio to be below 1.0. A ratio of 0.1 indicates that a business has virtually no debt relative to equity and a ratio of 1.0 means a company's debt and equity are equal.

Is a debt-to-equity ratio of 0.2 good?

Generally, a good debt-to-equity ratio is anything lower than 1.0. A ratio of 2.0 or higher is usually considered risky. If a debt-to-equity ratio is negative, it means that the company has more liabilities than assets—this company would be considered extremely risky.

What does a 1.0 debt-to-equity ratio mean?

A ratio of 1 would imply that creditors and investors are on equal footing in the company's assets. A higher debt-equity ratio indicates a levered firm, which is quite preferable for a company that is stable with significant cash flow generation, but not preferable when a company is in decline.

Is 0.2 a good debt ratio?

In general, many investors look for a company to have a debt ratio between 0.3 and 0.6. From a pure risk perspective, debt ratios of 0.4 or lower are considered better, while a debt ratio of 0.6 or higher makes it more difficult to borrow money.

Can debt ratio be less than 1?

If the ratio is below 1, the company has more assets than debt. Broadly speaking, ratios of 60% (0.6) or more are considered high, while ratios of 40% (0.4) or less are considered low. However, what constitutes a “good debt ratio” can vary depending on industry norms, business objectives, and economic conditions.

What is a bad debt to equity ratio?

The maximum acceptable debt-to-equity ratio for more companies is between 1.5-2 or less. Large companies having a value higher than 2 of the debt-to-equity ratio is acceptable. 3. A debt-to-equity ratio indicates that a company may not be able to generate enough cash to satisfy its debt obligations.

What is Tesla's debt-to-equity ratio?

31, 2023.

What is a ideal debt-to-equity ratio?

The ideal debt to equity ratio is 2:1. This means that at no given point of time should the debt be more than twice the equity because it becomes riskier to pay back and hence there is a fear of bankruptcy.

What is Apple's debt-to-equity ratio?

Apple has a total shareholder equity of $74.1B and total debt of $108.0B, which brings its debt-to-equity ratio to 145.8%. Its total assets and total liabilities are $353.5B and $279.4B respectively. Apple's EBIT is $118.7B making its interest coverage ratio 648.4. It has cash and short-term investments of $73.1B.

What does 1.2 debt-to-equity ratio mean?

Debt to equity ratio = 1.2. With a debt to equity ratio of 1.2, investing is less risky for the lenders because the business is not highly leveraged — meaning it isn't primarily financed with debt.

Is 0.5 a good debt-to-equity ratio?

The lower value of the debt-to-equity ratio is considered favourable, as it indicates a reduced risk. So, if the ratio of debt to equity is 0.5, that means that the company has half its liabilities because it has equity.

What is 0.2 debt to asset ratio?

A company that has a total debt of $20 million out of $100 million total assets has a ratio of 0.2. This ratio explains the portion of the capital structure of a business that has been funded by debt.

What does a debt ratio of 0.4 mean?

The calculation considers all of the company's debt, not just loans and bonds payable, and all assets, including intangibles. If a company has a total debt-to-total assets ratio of 0.4, 40% of its assets are financed by creditors, and 60% are financed by owners' (shareholders') equity.

What does a debt-to-equity ratio of 0.80 mean?

Question: What does a debt-to-equity ratio of 0.8 meanA debt-to-equity ratio of 0.8 means the means firm has $0.80 of debt for every dollar of assets. Reason:The debt ratio measures the amount of debt for every dollar of assets. A debt-to-equity ratio of 0.8 means the firm has $0.80 of debt for every $1 of equity.

What does a debt ratio of 0.3 mean?

Let's say a company has a debt of $250,000 but $750,000 in equity. Its debt-to-equity ratio is therefore 0.3. “It's a very low-debt company that is funded largely by shareholder assets,” says Pierre Lemieux, Director, Major Accounts, BDC.

What happens if debt to equity ratio is less than 1?

The debt to equity ratio shows a company's debt as a percentage of its shareholder's equity. If the debt to equity ratio is less than 1.0, then the firm is generally less risky than firms whose debt to equity ratio is greater than 1.0.

Can debt to equity ratio exceed 1?

A ratio of 1 means that both creditors and shareholders contribute equally to the assets of the business. A ratio greater than 1 implies that the majority of the assets are funded through debt. A ratio less than 1 implies that the assets are financed mainly through equity.

Can a low debt-to-equity ratio be bad?

In general, if your debt-to-equity ratio is too high, it's a signal that your company may be in financial distress and unable to pay your debtors. But if it's too low, it's a sign that your company is over-relying on equity to finance your business, which can be costly and inefficient.

Is a debt-to-equity ratio of 1.4 good?

The D/E ratio can vary as per the industry and various other factors that influence the company's performance. However, it is generally agreed that a debt-to-equity ratio between 1.5 to 2.5 indicates a financially stable company with a low risk profile.

Is a negative debt-to-equity ratio good?

What Does a Negative D/E Ratio Signal? If a company has a negative D/E ratio, this means that it has negative shareholder equity. In other words, the company's liabilities exceed its assets. In most cases, this would be considered a sign of high risk and an incentive to seek bankruptcy protection.

What is Coca Cola's debt ratio?

31, 2023.

What is Amazon's debt-to-equity ratio?

Amazon.com, Inc. (AMZN) had Debt to Equity Ratio of 0.29 for the most recently reported fiscal year, ending 2023-12-31.

What is Netflix debt-to-equity ratio?

Netflix Debt to Equity Ratio: 0.7064 for Dec. 31, 2023

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What debt-to-equity ratio do banks like?

Industry-wise Debt to Equity Ratio
IndustryTypical Debt to Equity Ratio Range
Financial Services (Banks)4.0 – 8.0
Telecommunications1.0 – 2.5
Industrial Manufacturing0.4 – 1.0
Consumer Discretionary (Retail)0.5 – 1.5
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Aug 9, 2023

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