The Next Dow? 25 Surprising Stocks, but look out below...
Do rising interest rates affect companies with high debt-to-equity ratio? If you know what a debt-to-equity ratio is, you would likely say Yes , as it increases the cost of the capital you use to finance your business. If your business uses debt to pay its current obligations, then uses next month's/quarter's/etc. revenue & profit to pay down that debt, you are pretty much: Operating on a month-to-month basis, where a bad month could really hurt, and Exemplifying the ancient Chinese proverb "Americans spend tomorrow's money today" (well, if you're not in America, it's still a dangerous game to play). The Investopedia.com definition of the debt-to-equity ratio is: A measure of a company's financial leverage calculated by dividing its total liabilities by stockholders' equity. It indicates what proportion of equity and debt the company is using to finance its assets. Now, most smart businesses only use debt to finance aggressive gr...