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Balance Sheet
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Debt/Equity Ratio
Term category: Finance/Accounting
In 10 words or less:  A ratio that helps investors determine the debt load of a company.

Definition: This is the ratio of the company's liabilities to its equity (total value of all the stock).

StockJargon Advice: The debt-equity ratio is an important number to consider. A company with a high debt-equity ratio is one that has a considerable amount of debt.

Debt in itself isn't bad. However, debt requires that the company make timely interest payments. That means it's important that companies with high debt-equity's have positive earnings and strong cash flows. Otherwise, it means they might default on paying their debt.

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