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PREVIOUS ARTICLE Annual Report NEXT ARTICLE Profitability ratios

Lower numbers here mean a company is using less leverage, or debt, to operate.

Although larger companies can generally handle larger debt loads, the D/E Ratio taken in isolation doesn’t tell you anything about possible trends in the use of debt.  Has the company’s debt been steadily increasing over the past years?  

 If so, when you couple a relatively high debt with a relatively low liquidity, you could be looking at trouble if business conditions take a dramatic turn for the worse.