Financial Glossary
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Definition of net debt/equityNet debt/equity Net debt/equity is a gearing/leverage ratio, used to measure of balance sheet risk. The higher the proportion of debt in the funding mix, the higher profits will be in good times and the lower they will be in bad times. Gearing is associated with risk because it increases the volatility of profits - and because the lenders have first call on profits. The gearing ratio shows the amount of money borrowed in relation to the equity (or the shareholders' funds). Gearing can also be calculated as the ratio of debt to debt plus equity or the ratio of equity to total assets or debt to EBITDA. In the US, gearing is referred to as leverage. FinanceTalking LtdA Leading provider in financial training for non-financial people, corporate communications, financial PR and Investor Relations. We've spent years developing practical, interesting, engaging ways for people to learn - and have developed multiple ways to make the learning stick. Most importantly, people leave our courses with the tools in place to use what they have learnt back at work - and make a difference. Our most popular online courses include:
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