Debt-to-Market Ratio
factor.formula
Debt-to-Market Ratio:
in:
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The total amount of a company's liabilities at the end of the most recent reporting period (such as the end of a quarter or year). This data is usually taken from the balance sheet section of a company's financial statements and includes both short-term and long-term liabilities, such as accounts payable, notes payable, long-term loans, bonds payable, etc.
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The total market value of the company is calculated by multiplying the company's total share capital by the current stock price. This data reflects the market's assessment of the company's overall value. Usually, the circulating share capital is used to calculate the circulating market value. If the full market value is required, the total share capital needs to be used. In order to maintain the applicability of the factor, the total share capital is used to calculate the full market value.
factor.explanation
The debt-to-market ratio, or Total Liabilities / Market Capitalization, is one of the commonly used indicators to measure a company's financial leverage level. The higher the ratio, the higher the proportion of debt financing used by the company, and the higher the financial risk may be. A high debt-to-market ratio usually means that the company needs to pay more interest expenses, which has a negative impact on profitability, but it may also lead to a higher return on assets, depending on the efficiency of debt use. When evaluating this ratio, investors should consider factors such as industry characteristics, company growth stage, and profitability. In addition, the calculation time point of this indicator should be noted. Generally, the total liabilities in the most recently disclosed financial report and the total market value at the corresponding time point are used for calculation.