I’m currently doing a crash course about Stocks and I need to understand this bit of reading Stock Profile. What does a small or big number indicate? Let’s say Stock A has a Debt to Equity of 6.41 and Stock B has Debt to Equity of 100.52, which one is looking good?
Since I’ve heard that it’s also essential to measure this part, but I just can’t understand what the number entails. Tysm~ Any more inputs would be greatly appreciated.
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Debt is how much the company owes, equity is how much stuff is owned by shareholders. A company with high debt and low equity can’t take out loans if they need to so that’s usually a bad sign. I was always told you should look for companies with a debt-equity ratio around 2.5. 6.5 sounds bad and 100.25 sounds INCREDIBLY BAD
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