debt/equity ratio equity, percentage, only

torontoanalyst

do we only use the formula debt/equity ratio/1+debt/equity ratio to find the percentage of debt for use in the WACC calc? Me most confused??

wxs1986

you could also use it to determine net borrowings in FFCE questions.

troymo

Hey jar jar binks, let me help you.

For WACC you need capital structure WEIGHTINGS, IE D/D+E is the weight.

D/E is the debt/equity ratio which may be a solvency test, and one of the most likely uses will be to unlever/relever beta.