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What is meant by debt equity ratio? |
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Answer» It is calculated to assess the long term solvency position of a business concern. Debt equity ratio expresses the relationship between long term debt and shareholder’s funds. Debt equity ratio = (Long term debt)/(Shareholders Funds) Capital employed = Shareholder’s funds + Non current liabilities Greater the return on investment better is the profitability of a business and vice versa. |
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