1.

What is meant by debt equity ratio?

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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