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Debt-Equity Ratio - Definition
Below, you'll find a definition of this investing term...

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

TeenAnalyst 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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