Equity ratio

📘 Briefly explained The equity ratio is a business management metric that indicates the ratio of a company’s equity to its total capital. It shows what proportion of assets is financed by its own funds rather than by debt. It is calculated by dividing equity by total capital and multiplying the result by one hundred. A high equity ratio means that a company is financially stable and independent of lenders. A low ratio, on the other hand, indicates greater indebtedness and a higher financial risk. The metric is used by banks, investors and analysts to assess a company’s creditworthiness and resilience in crises. 🔍 Why this matters The equity ratio is a business management metric that indicates the proportion of equity in a company’s total capital. It is calculated by dividing equity by the balance sheet total and expressing the result as a percentage. This ratio serves as a benchmark for a company’s financial stability and risk-bearing capacity. A high value indicates a solid capital base and lower dependence on lenders. …