can u tell me the idol ratio of debt equity ratio. i m confused it is 1:2 or 2: 1. there is different thinking of different authors about this ratio. so tell me pls
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pls help me
Replies (8)
ideal debt equity ratio is 2:1
yes, agreed. The ideal debt-equity ratio is 2:1.
it can very from case to case,
but some banks adopts debt - equity ratio upto 3.5 : 1
2:1
Ideal DE Ratio is 2:1. Regarding your confusion whether it is 1:2 or 2:1, try to understand the concept. Funding of any entity would be composed of its own fund and debt fund. Generally in most of the cases debt portion is more than the owner's fund. Now the question is that what is the ideal debt.. That depends on amount of equity.. So generally it is said that debt should not exceed twice of equity fund.. So ratio is 2:1. Hope it is now clear to you.
2:1 is d ideal ratio
Ideal Considered to be 2:1 ...
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