What is ideal debt/equity ratio?

The ideal debt to equity ratio is 2:1. This means that at no given point of time should the debt be more than twice the equity because it becomes riskier to pay back and hence there is a fear of bankruptcy. 

However, it is difficult to put a mark of ideal ratio since, the type, nature, and size of every business and industry is different. 

Further Readings – 

  1. Capital Adequacy Ratio (CAR)
  2. What Do You Mean By Line of Credit?
  3. Non Performing Assets (NPA)
  4. Types of Bonds

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