Calculation Of Liabilities Operating Rate

What is debt operating rate?

Liabilities operating rate is long-term

Calculation formula of liability operating rate

Liabilities operating ratio = total long-term liabilities / owners' equity total * 100% (generally between 25% and 35% is more reasonable).

Note: Liabilities operating rate is generally inversely proportional to the long-term interest rate of banks and is directly proportional to the profitability of enterprises.

Indebtedness operating rate index

(1) when the ratio rises or higher:

1, advantages:

A, enterprise production and operation funds increased, enterprise funding sources increased;

B, the external capital level of the enterprise's own funds has been raised, and the potential of its own funds has been further developed.

2. Shortcomings:

A, capital costs increased, long-term liabilities increased.

B, enterprise risk increases, once the enterprise is in a difficult position, such as the money can not be collected and the liquidity is insufficient, long-term liabilities will become the burden of the enterprise.

(two) when the ratio is lower or lower:

1, advantages:

A, strong corporate independence.

B, corporate long-term capital stability is good.

2, disadvantages:

A, the profit margin of enterprise products is low.

B, the profit rate of the enterprise is high, the profit margin of the enterprise's own capital is greater than the bank interest rate, and the enterprise does not make full use of the external funds to make profits for the enterprise.

C, there may also be too high current liabilities and unstable capital structure in the course of production and operation.