Analyze_This

Good point janakisri - need to make sure I break down the D/E ratios like that when given from now on.

Thanks.

yospaghetti

oh man... you're right, although I have not seen it in CFAI texts as that. They usually say D/E = 30/70, etc.

jacksparrow

easiest way is debt to equity =0.3

Result is D/E = 3/10

Weight are always (D/(D+E)) and (E/(D+E))

Debt weight 3/13
Equity Weight 10/13

RMontgomery

> D/E = 3/10
> Debt weight 3/13
> Equity Weight 10/13

That's easier to remember! Thanks.

firat

I look at it as if D/E= 0.3, then D:E =1:0.3, then debt =(1/1.3) and equity=0.3/1.3

luda002

jeff,

D/E = 0.3
means
D:E = 0.3 : 1

D/(D+E) = 0.3/(1+0.3)=0.3/1.3
E/(D+E) = 1/1.3

CP

ryanlb

Guys, check this out. Just treat like an algebra equation from highschool.

For instance, if E/D = 0.3, well you also know that E + D = 1.0. So, just solve for E....or D for that matter.