Equity ratio
From Wikicpa
The Equity ratio is one of the most important ratios and is used in conjunction with the current ratio in indicating credit strength. Is is of great use in measuring the capital structure and the long-term solvency of a company
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As to what the proper proportions of debt and net worth are, no hard and fast rule can be used. The general principle to be used is that debt should be kept within such limits that the entity can confidently face a down turn in business with fear of insolvency.
