Technicals Stability Returns



Understanding Short-Term Debt to Equity Ratio


Short-Term Debt to Equity Ratio measures the company's ability to meet its short-term debt obligations. Short-Term Debts are current liabilities of the company. Some short-term debts are Wages, current taxes, accounts payable, short-term loans, etc.

The ideal Short term debt to equity ratio is 1. A low ratio indicates that more assets are acquired using equity. And high ratio indicates that the company has taken a lot of debt for running the company's operations.

The formula for calculating Short-Term Debt to Equity Ratio

Short-Term Debt to Equity


Example: For the financial year Aavas Financiers reported short-term debt as Rs.1003.95 Cr. and total equity as Rs. 2400.81 Cr.
The value as per the formula (Short-Term Debts / Total Equity) is calculated as (1003.95 / 2400.81) = 0.42

Range Indicator of Short-Term Debt to Equity Ratio

Range Indicator Comments Screener at TSR
Below 0.3 Strong Bullish Debt Free Yes
0.3 to 0.5 Bullish Almost Debt Free Yes
0.5 to 1 Mild Bullish Low Debts Yes
1 to 1.5 Neutral Stable Debts Yes
1.5 to 2 Mild Bearish Debt Burden Yes
2 to 3 Bearish High Debt Burden Yes
Above 3 Strong Bearish Extremely High Debt Burden Yes


Related Short-Term Debt to Equity Screener
Solvency Screener Short Term Debt To Equity 40 To 60 Short Term Debt To Equity 20 To 40 Short Term Debt To Equity 10 To 20