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The ideal debt to equity ratio is 2:1. This means that at no given point of time should the debt be more than twice the equity because it becomes riskier to pay back and hence there is a fear of bankruptcy.
However, it is difficult to put a mark of ideal ratio since, the type, nature, and size of every business and industry is different.
Further Readings –
- Capital Adequacy Ratio (CAR)
- What Do You Mean By Line of Credit?
- Non Performing Assets (NPA)
- Types of Bonds
| Related Links | |
| Cash Reserve Ratio (CRR) | Syllabus and Strategy for UPSC Economy |
| Leverage Ratio | Statutory Liquidity Ratio (SLR) |
| Previous Year UPSC Question Papers | UPSC Mains Economy Questions |
