Debt ratio

Capital Investment. Erom the viewpoint of a project, all of the capital that must be raised is external capital. Equity capital is the ownership capital, eg, common and preferred stocks or retained cash, whereas debt capital consists of bonds, mortgages, debentures, and loans. Nearly all investment involves a mixture of both types so as to maximize the return on investment (21). The debt ratio (debt/total capital) for the chemical industry is typically over 30%. Because financial details are not well known during the preliminary phases of project analysis, the investment is viewed simply as the total capital that must be expended to design and build the project. 

Symbol indicating differentiation Debt ratio defined by Eq. (9-139) Discounted-casb-flow rate of return Empirical constant in general equations... 

Careful study of the ratios can produce many inferences as to the health of the company. For example, the leverage, or debt, ratio (DR) for this example is... 

De Broukere mean diameter, 18 135 Debt capital cost, 9 542 Debt ratio (DR), 9 541 Debt structure, 9 542-543 Deburring, surface, 9 597-598 Debutanizer, 10 614—615 Debye-Huckel theory, of electrolytes, 3 415 18... 

Stockholders equity = total assets - total debt Equations (9-130) and (9-136) can be combined to give net annual profit total assets - total debt Equation (9-137) can also be written to include a quantity called the debt ratio (DR), which gives... 

Most debt capital is raised by issuing long-term bonds. A mortgage is a bond that is backed by pledging a specific real asset as security against the loan. An unsecured bond is called a debenture. The ratio of total debt divided by total assets is known as the debt ratio (DR) or leverage of the company. 

On December 17, 2007, the US Congress voted the budget for loan guarantees to noncarbon technologies, including 18.4 billion for nuclear reactors. This means that up to 12 3 billion nuclear projects with a debt ratio of 50 percent could benefit from this loan guarantee. 

Debt ratio = total debt/total assets... 

Commercial robustness Credit/debt ratios Turnover Gross/pre-tax profits Three-year profile... 

Takeovers do not automatically come at bondholders expense if an acquisition secures and enhances the own market position or opens up new business areas, bondholders profit as well. Only a competitive company can generate the cash flows necessary to pay interest and principal. If an acquisition is cautiously financed (e.g., neutral with respect to debt ratios) or the issuer is bought by another company with a higher rating, bondholders will also benefit. ... 

Since the credit quality of a corporation may vary over time, permanent credit assessments are indispensable so that the bond can be sold in time before a rating downgrade or, respectively, to achieve the appropriate risk premium at any time. In credit assessments, investors fall back on data published in annual or quarterly reports, but also estimate future values based on extensive scenario analysis. These are factors such as debt ratio, liquidity, and profitability of the corporation that are of importance for credit assessment. 

The debt ratio, sometimes called total debt ratio or debt-to-assets ratio, shows how much of the company s funds come from sources other than equity. 

Debt ratio = Total liabilities/Total assets... 

A debt ratio of 69% indicates that lenders have supplied more than half of the company s funds. Creditors and lenders prefer lower debt ratios, much like mortgage officers do when a homebuyer applies for a mortgage. The less debt a homebuyer has, the less likely the homebuyer will default on the loan. Similarly, a lower debt ratio for a company lessens the likelihood of default. 

High debt ratios will likely prohibit the company from acquiring any new debt financing from lenders. In such cases, it will need to rely on equity sources instead. If they could obtain debt financing, it would likely be more costly to borrow the funds. Lenders will increase the borrowing interest rate to offset the higher risk of non-repayment. 

The debt ratio is similar to the debt-to-equity ratio. 

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