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Debt to equity ratio |
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Debt to equity ratioNet borrowings of a company divided by shareholders' funds. The ratio shows the amount of financing that is provided by sources other than the shareholders.Net borrowings means the total borrowings of the company from banks, other financial institutions, debenture holders and preference shareholders, less any cash that is readily available and any short term cash holdings.Both figures can be found in a company's balance sheet. The ratio is often multiplied by 100 and expressed as a percentage. The higher the percentage, the more risky for lenders to the company. Most lenders like the percentage to be below 50%. If it is above 100%, the company is said to be highly geared.Similar MatchesEquity optionsEquity optionsSecurities that give the holder the right (but not the obligation) to buy or sell a specified number of shares of stock, at a specified price for a certain (limited) time period. Typically one option equals 100 shares of stock. Equity linked mortgageEquity linked mortgageThe lender takes ownership of a stake in the equity of the property. This means that they lend you less than the full amount that is required to buy the home. Interest is only charged on the amount that they lend you and not on the full value of the property. When you sell the property, the lender receives payment in proportion to the amount of equity that they own, and therefore benefits from any increase in the price of the property. Return on equityReturn on equityThe adjusted profit of a company divided by its equity. For instance, if the adjusted profit of a company is £1m and Equity is £10m, the Return on Equity is 10%.Adjusted profit is the profit of the company adjusted to exclude the impact of non-recurring exceptional gains, losses, income and charges. The figure can be found in the company's Profit and Loss Account. Equity is the total of ordinary share capital plus reserves, and both figures appear in the company's Balance Sheet. In calculating Return on Equity, you can use the Equity at the end of the year or the average between the opening and closing equity. Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA)Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA)Legislation to increase tax revenue by eliminating various taxation loopholes and instituting tougher enforcement procedures in collecting taxes. Deferred equityDeferred equityA common term for convertible bonds, which recognizes their equity component and the expectation that the bond will ultimately be converted into shares of common stock. Further SuggestionsEquity linked EurobondsCarrot equity Sweat Equity Equity Stratified equity indexing Preferred equity redemption stock (PERC) Equity funding Top down equity management style Return on equity (ROE) Debt/equity swap Unlevered cost of equity TEFRA (Tax Equity and Fiscal Responsibility Act of 1983) Shared equity transaction Leveraged equity Equity floor high equity Stockholder equity Growing Equity Mortgage (GEM) homeowners equity account Euroequity issues Appel Loan (Accelerating Payoff Progressive Equity Loan) Owners equity Cost of equity personal equity plan Debt for equity swap |
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