Business and Personal Finance Dictionary

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• DEBT-EQUITY RATIO
  
  The ratio of a company's liabilities to its equity. Long-term debt-equity is the ratio of a company's long-term liabilities to its equity. Total debt-equity is the ratio of a company's long-term and current liabilities (debt that will be paid off within one year) to its equity. The higher the level of debt, the more important it is for a company to have positive earnings and steady cash flow. Debt requires the timely payout of interest to debt holders, so it is important to analyze a company within the context of the likeliness that it will have adequate resources to meet its payments in the future. Debt-equity ratio is most useful for comparing companies within the same industry.
  
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