Satisfactory ratio between Long term Debts and Shareholder rsquo s Funds is ........

General Accounting Principles Ratio analysis

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Satisfactory ratio between Long-term Debts and Shareholder’s Funds is :

1 : 1

3 : 1

1 : 2

2 : 1

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Explanation:

2 : 1

The debt-to-equity (D/E) ratio is calculated by dividing a company’s total liabilities by its shareholder equity. These numbers are available on the balance sheet of a company’s financial statements.

The ratio is used to evaluate a company's financial leverage . it reflects the ability of shareholder equity to cover all outstanding debts in the event of a business downturn.