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Debt/equity ratio

Questions › Category: Investor Psychology › Debt/equity ratio
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Guo An Ong asked 3 years ago

Hi we should look for companies with debt/equity less than 0.5
 
i realise by your definition you only look at long term + short term debt..
but isnt the debt to equity = total liabilities/ total shareholder equity? 

4 Answers
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Victor Chng answered 3 years ago

Hi Guo An,
 
There is many definition on debt to equity. It is depend on how you see it. Personally, we take debt because the lender can bring you to court if you failed on payment. Whereas, if the company owe their supplier money, most of the time the supplier will just write off as bad debt. 

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Guo An Ong answered 3 years ago

Ic! Ok thanks!

Victor Chng replied 3 years ago

welcome :)

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Katty Low answered 3 years ago

Hi
I would like to ask whether I should include acquisitions of a company as capital expenditure of the organisation. I understand that normally Capex include only ‘plant, property, equipment.’ Thank you.

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Victor Chng answered 3 years ago

Hi Katty,
 
Acquisition of company are not capex so you should not include.