Is equity shareholders capital or networth?



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while explaining debt/equity ration, what is equity ? Is it shareholders capital or net worth(shareholders equity)?
you have used share holders capital for this purpose but formula says (Debt/shareholders equity) (reference: http://www.investopedia.com)

1 Answer(s)


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In Debt/Equity Ratio, Equity is Shareholders Capital and not net worth.
This ratio helps a Financial Analyst understand how much leverage the company has taken and how much new doubt if at all the company can add.