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Debt to Equity Ratio

Discussion in 'Technical Analysis' started by gunwalvikram, Apr 6, 2017.

  1. gunwalvikram

    gunwalvikram Member

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    What does negative debt to equity ration means exactly.
     
    gunwalvikram, Apr 6, 2017
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  2. shabbir

    shabbir Administrator Staff Member

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    Which company has negative debt to equity ratio?
     
    shabbir, Apr 7, 2017
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  3. gunwalvikram

    gunwalvikram Member

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    gunwalvikram, Apr 7, 2017
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  4. shabbir

    shabbir Administrator Staff Member

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    This is quite a number but I picked up the simple explanation from here - https://www.quora.com/What-does-a-n...atio-mean-What-would-it-imply-about-a-company

    So let me try to explain in my own language.

    Debt to Equity is Net debt divided by All Equity

    So either the numerator or denominator is negative.

    When equity is negative - Business has more cumulative losses that it's entire market cap or equity capital. Rare, but happens and it can mean business may not survive.

    The other is that net debt is negative which means a company has surplus cash to invest as debt elsewhere. A nice option for business but again this is rare as well but in a good way.

    In Suzlon it is the first one.
     
    shabbir, Apr 7, 2017
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  5. gunwalvikram

    gunwalvikram Member

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    gunwalvikram, Apr 7, 2017
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