If we have 2 companies, let's say company X and Y with debt to equity ratio 1:1 and 2:1 which company has a better debt to equity ratio and why?

Question added by karen kisanga
Date Posted: 2016/02/11

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by Amr Ibrahim , Equity Research Analyst , Mubasher International

the first is the better, as the latter has a debt burden at double of its capital which causes high ris to the business, i.e bankruptcy

by Muhammad Hussain , ACCOUNTANT , EPESOL PVT LTD

by keeping in view liquidity of the firm, company x is in a better position as compared to company y

by Gayasuddin Mohammed , Advocate , Practicing Law before High Court at Hyderabad

X which has1:1 ratio has a better debt to equity ratio than compared with the other has2:1. Thanks.

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