5 Most Important Financial Ratios to Analyze a Company

In this article, we will take a look at the 5 most important financial ratios to analyze a company. If you want to read our detailed analysis, you can go directly to 12 Most Important Financial Ratios to Analyze a Company.

5. Debt to Equity Ratio (D/E)

Number of Mentions: 4

According to our methodology, the debt-to-equity ratio (D/E) is one of the most important financial ratios to analyze a company. The debt-to-equity ratio (D/E) is a measure of how much a company owes to its creditors compared to its shareholder equity. The ratio is calculated by dividing total debt by total shareholders equity. Total debt includes short-term debt, long-term debt, and other fixed payments. The lower the ratio, the less riskier a business is. A business with a higher debt-to-equity ratio (D/E) suggests that a company may be unable to meet its debt using its financing options in case of bankruptcy.