Basics of Stock Market
What is a Bull and Bear Market? Who are Market Movers? Who are Market Makers? What is Dematerialization of Shares? (Demat) IPO vs FPO vs OFS: Whatโ€™s the Difference? What is ASBA in IPO Application? What is Grey Market and Grey Market Premium? What is Liquidity in Stock Market? What is Bid Price & Ask Price? What is a Stop-Loss Order? What is Market Order vs Limit Order? What is Pledge of Shares? Who are Promoters and What is Promoter Holding? What is Margin Trading? What is Short Selling? What is Market Depth? Equity vs Debt โ€“ Whatโ€™s the Difference? Role of NSDL and CDSL in the Stock Market Mutual Funds vs Stocks Who are FIIs and DIIs in the Stock Market? What is a Portfolio? What is Settlement Cycle (T+1, T+2, T+3) in Stock Market? Trading Hours in the Indian Stock Market What are Circuit Limits & Circuit Breaker in the Stock Market? What is Book Value of a Stock? What is Rights Issue? Understanding Stock Split and Bonus Shares What is Dividend in Stocks? What is Face Value of a Stock? Difference Between Intraday vs Delivery Trading. What is Volume in Stocks? Large Cap vs Mid Cap vs Small Cap What is Market Capitalization? What is Sensex and Nifty? Who are Retail Investors? Stockbroker vs Sub-broker: Whatโ€™s the Difference? What is SEBI and Its Role in the Stock Market? Difference Between NSE and BSE How to Invest in the Stock Market in India What is IPO (Initial Public Offering)? Why Do Companies Issue Shares? Types of Stock Markets: Primary vs Secondary Stocks vs Shares โ€“ Whatโ€™s the Difference? How Does the Stock Market Work? What is Stock Market?
Fundamental Analysis
How Mergers & Acquisitions (M&A) Affect a Companyโ€™s Fundamentals Industry Structure Analysis โ€“ Porter's Five Forces! Consolidated Results vs Standalone Results What is Stock Dilution? What is Promoter Pledge? What are Non-Performing Assets (NPAs)? What are Contingent Assets? What is Working Capital Analysis? CAGR vs YoY Growth: Whatโ€™s Better? What is Sectoral Analysis? Importance & How to Do It? What is the Scuttlebutt Method in Investing? What is PEG Ratio? What is a Moat in Investing? How to Find Undervalued Stocks? What is Margin of Safety? What is Intrinsic Value? Impact of Inflation on Earnings Operating Leverage vs Financial Leverage โ€“ Whatโ€™s the Difference? What is Goodwill in Balance Sheet? Asset-Light vs Asset-Heavy Businesses What are Contingent Liabilities? Conference Call Analysis Guide How to Analyze Quarterly Results? What is Credit Rating? What is Promoter Holding? What is Shareholding Pattern? How to Read an Annual Report? What is DuPont Analysis? Net Profit Margin vs Gross Profit Margin What is Free Cash Flow? What is Operating Profit Margin? What is EBITDA & EBIT? What is Dividend Yield? What is Interest Coverage Ratio? What is Debt to Equity Ratio? ROE vs ROCE: The Battle of Profitability Metrics! What is PB Ratio? (Price to Book Ratio) What is PE Ratio? (Price to Earnings Ratio) Understanding EPS (Earnings Per Share) What is a Cash Flow Statement? What is Profit & Loss Statement? Balance Sheet Analysis What is Fundamental Analysis?

๐Ÿ“ What is Debt to Equity Ratio?

๐Ÿฆ What is Debt to Equity Ratio? Imagine you want to open a burger shop ๐Ÿ”. โœ”๏ธ You have โ‚น1,00,000 of your own money. โœ”๏ธ You also borrow โ‚น2,00,000 loan from a bank. Now whatโ€™s happening? ๐Ÿค” ๐Ÿ‘‰ You are running your business with both your money AND other peopleโ€™s money (loan). Debt to Equity Ratio helps you understand this mix! ๐ŸŽฏ ๐ŸŽฏ What is Debt to Equity Ratio? ๐Ÿ‘‰ Debt to Equity Ratio = Total Debt รท Shareholders' Equity โœ”๏ธ Debt = Money borrowed from banks or others ๐Ÿฆ โœ”๏ธ Equity = Money owned by shareholders (like YOU) ๐Ÿ’ฐ ๐ŸŽจ Funny Example: Bunty opens a tea stall โ˜•: โœ”๏ธ He invests โ‚น50,000 of his own money (Equity = โ‚น50,000). โœ”๏ธ Takes โ‚น1,00,000 loan from his uncle (Debt = โ‚น1,00,000). ๐Ÿ‘‰ Debt to Equity Ratio = โ‚น1,00,000 รท โ‚น50,000 = 2 Means: For every โ‚น1 of Buntyโ€™s own money, โ‚น2 is borrowed money! ๐Ÿ˜ฎ So the business is running more on loan than on Buntyโ€™s own cash! ๐Ÿค” Why is This Ratio Important? โœ”๏ธ Tells how much the company depends on loans. โœ”๏ธ Shows the financial risk โ€” more loans = more risk! โš ๏ธ โœ… Low Debt/Equity Ratio (below 1) = Company using mostly its own money = Safe ๐Ÿ  โŒ High Debt/Equity Ratio (above 2) = Company depends heavily on loans = Risky! ๐Ÿ’ฃ ๐Ÿ’ฅ When Low Debt to Equity Ratio is Good? โœ”๏ธ Company is safe during bad times (no loan burden) โœ”๏ธ Less interest to pay = More profit! ๐Ÿ˜ โš ๏ธ When High Debt to Equity Ratio is Dangerous? โŒ Company must pay big interest โ€” even if no profit! ๐Ÿ˜ฑ โŒ During bad times โ€” risk of default or bankruptcy! ๐Ÿšจ ๐ŸŽฏ But Waitโ€ฆ High Debt is Not Always Bad! Some industries (like construction ๐Ÿ—๏ธ or airlines โœˆ๏ธ) NEED big loans to operate. โœ”๏ธ If these companies earn well โ€” high debt is OK. โœ”๏ธ But if profits fall โ€” they crash like a bad spaceship! ๐Ÿš€๐Ÿ’ฅ ๐Ÿ† Quick Gyaan: โœ”๏ธ Debt to Equity Ratio below 1 = Safe zone! ๐Ÿ›ก๏ธ โœ”๏ธ Debt to Equity Ratio 1-2 = Acceptable for growing businesses! ๐ŸŒฑ โœ”๏ธ Debt to Equity Ratio above 2 = Caution! Check more details! ๐Ÿ” ๐ŸŽˆ Funny Tip: Checking Debt to Equity Ratio is like checking your friend's credit card bill before lending him money โ€” Too many loans? Better say NO! ๐Ÿšซ๐Ÿ’ณ๐Ÿ˜‚ ๐Ÿ”‘ In Short: โœ”๏ธ Debt to Equity Ratio = How much loan vs own money in business. โœ”๏ธ Low Ratio = Peaceful sleep for investors ๐Ÿ˜ด โœ”๏ธ High Ratio = Tension + Risk + Nightmares ๐Ÿ˜ฌ ๐Ÿ’ก "A strong business stands on its own feet, not on borrowed crutches!" ๐Ÿฆต๐Ÿ’ฐ
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