Why is a debt/equity ratio usually between 0.5 to 2.5 but the debt/equity percentage much, much...

Why is a debt/equity ratio usually between 0.5 to 2.5 but the debt/equity percentage much, much higher like 384% for example with Lumen Technologies?

Expert Solution

Debt equity ratio is calculated in NUMBER OF TIMES, whereas debt equity percentages are calculated in terms of percentage and they will be multiplied with 100, so, debt equity ratio are usually smaller but that equity percentages are usually higher.

When, debt equity ratio is MULTIPLIED WITH 100, it will become debt equity percentage.

For example - If a company has 50 million debt and 100 million equity.

Debt equity ratio= (50/100)= .50 times

Debt equity percentage=(50/100)*100= 50%

jeff jeffy answered 2 years ago

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