In: Finance
Identify a matching firm in your firm's industry with similar size as your firm (use 2016 total assets to choose a matching firm). Compare your firm's long term debt/total assets and long term debt/equity ratio with your matching firm
My firm (long-term debt to total assets ratio) |
Matching firm (long-term debt to total assets ratio) |
|
2015 |
0.0037 |
0.0439 |
2016 |
0.0010 |
0.0198 |
2017 |
0.0050 |
0.0000 |
2018 |
0.0103 |
0.0000 |
2019 |
0.2422 |
0.0000 |
Average |
0.05244 |
0.012746 |
My firm (long-term debt to Equity ratio) |
Matching firm (long-term debt to Equity ratio) |
|
2015 |
0.0055 |
0.0717 |
2016 |
0.0019 |
0.0314 |
2017 |
0.0212 |
0.0000 |
2018 |
0.1145 |
0.0000 |
2019 |
-1.5283 |
0.0000 |
Average |
-0.2770 |
0.0206 |
If we compare My firms and matching firms (L-T debt to total asset ratio, we can see that, the firm selected by me , My firm has shown steady incere in the debt to total assets from 2018 onwards. Net debt to total assets is a leverage ratio that determines the gross debt to a company's own assets. Using this method, investors will equate the profitability of one business with that of other firms in the same industry. This data may represent a company's financial stability.
If we look at LT debt to equity ratio , we find
Lt debt to equity sharply fell in 2019 for 'My firm"
if we look in 2016 total assets to choose a matching firm
So the chosen my firm has lower D to E and D to Total Asset ratio denoting it is a company with a lower financial leverage which indicates that, even if the company does have debt, its operations and sales are generating enough revenue to grow its assets through profits.
Thanks