This illustrated glossary uses Visual Finance™ to provide a contextualized 'big picture' view of financial results. The examples feature data for the Round Number Company—a 'made-up company' with simplified figures. The Appendix presents an explanation of how to read Visual Finance as well as the financial statements and VF views for the Round Number Company.
Ratio: Liabilities divided by Equity.
Example: The Round Number CompanyTotal Liabilities = 160; Equity = 140 Debt-to-Equity = 160/140 = 1.14 |
This ratio is a measure of the company’s safety, or ability to withstand adversity. This is a real What do you mean by that? term. What is meant by ‘debt'? Total Liabilities? Interest-bearing debt? Long-term debt? See the discussion at Debt.
See also the discussion at Leverage.
The above is our generic explanations of common corporate financial terminology. Actual meanings can vary widely from company to company; in order to have the correct internal definition you need to ask your Finance Department, "What do you mean by that?"
term list.