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in Ratio Analysis by (63.4k points)

The debt equity ratio of a company is 0.75 : 1. If company obtains long term loan, what effect will be on this ratio?

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Generally, debt equity ratio of 1 : 1 is considered safe. Here debt equity ratio is 0.75 : 1, which is lower than 1:1. So, company should be consider to take long term loan or loaner should think to give loan because of repayment of the loan should take time or late.

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