Definition: equity ratio
The equity ratio describes the share of equity in the total capital (equity + debt) of a company.
Significance for the evaluation
The equity ratio is an indicator of a company's creditworthiness. A high equity ratio reduces the risk of insolvency and, conversely, means lower debt.
Calculation
Equity ratio = (equity / total capital) * 100
Rating
+1 point: equity ratio> 25%
0 points: Equity ratio between 15% and 25%
-1 point: equity ratio <15%
Other interesting articles:
- Which stocks to buy? 12 key figures simply explained
- Return on equity - key figures simply explained
- Profit margin - key figures simply explained
- Price-earnings ratio (P / E) - key figures simply explained
- Price-earnings ratio (P / E) over 5 years - key figures simply explained
