Debt Ratio

The Debt Ratio compares a company’s debt to assets. This allows the investor to see the long term perspective of a company.

The $17 Stock Trading SystemFind Stocks On The Net With A Greater Than 90% Chance Of Going Up Near Term And Gives 3 Simple Trading Rules For Hefty Profits.

Options University Candlestick Secrets How To Master The Art Of Candlestick Charting To Make Bigger Trading Profits, With A Greater Degree Of Accuracy And Less Risk! The formula looks like this

Candlestick Patterns Candlestick Patterns provide the best way to make money in the Stock Market. Master them and succeed.

Creating Wealth Without Risk. Build Your Personal Fortune With Government Issued, Tax Lien Certificates, yielding as much as a 50% guaranteed return.

If a company has a debt ratio above 1 it has more debt than assets. This makes it a bad investment for the long term. If the number is below 1 that means it has more assets then debt. This makes it a good long term investment.

This is the theory however. While it is important to understand that too much debt can be a bad thing for a company it is also important to understand that debt is not always bad. Borrowing money and accumulating debt can actually help a company grow because they have more money to invest in themselves.

This in turn can help the investors. But beware of ignoring this ratio too much. If you don’t at least take the debt ratio into consideration you could risk investing in a company that will not last through the next recession.