### FRDebtEquityRatio (TotalLiabilities, TotalEquity)

Basic and Crystal syntax.

##### Format

`FRDebtEquityRatio(TotalLiabilities, TotalEquity)`

##### Arguments

- TotalLiabilities is a Number or formula. In general, TotalLiabilities consist of all the current and long term liabilities in a company's balance sheet. However, some analysts would only include short and long term banks debts in calculating this ratio.
- TotalEquity is a Number or formula. In general, TotalEquity consist of common stocks, preferred stocks, capital surplus, and retained earnings in a company's balance sheet.

##### Action

FRDebtEquityRatio returns the ratio between TotalLiabilities and TotalEquity (for example, DebtEquityRatio = TotalLiabilities / TotalEquity).

##### Typical uses

This ratio is used to measure the capital structure of the company. It can be used to find out the relationship of total liabilities/debt to a company's equity and can be a warning that the company's borrowing is excessive. The higher the ratio, the higher the financial risk.

##### Examples

The following examples are applicable to both Basic and Crystal syntax:

`FRDebtEquityRatio(2.6, 1.3)`

Returns 2.

`FRDebtEquityRatio(1.5, 2.5)`

Returns 0.6.

Note: None of the arguments can be negative; you may have to check for negative values before passing the arguments.

##### Comment

FRDebtEquityRatio is one of the many financial analysis tools used in interpreting the financial position of a company. As in the case of all ratios, it has to be used with caution. It can just be used as a clue and not solid proof for forming a judgment on the financial status of a company.

Neither one of the ratios can be used alone for doing financial analysis and there are no fixed rules on the results of the ratios. Apart from differences between type of industries, result varies among different companies within the same industry and within different account periods. The results should only be used for relative comparison and trend analysis, rather than treating them as something absolute.

Seagate Software, Inc. http://www.seagatesoftware.com Please send comments to: techpubs@seagatesoftware.com