1. TASK: Insert the appropriate word in the text below:
aggressive - finance - generate - indicates - interest - lead
measure - operates - outweigh - proportion - tend - volatile
Debt to equity ratio is a ____________ of a company's financial leverage calculated by dividing its total liabilities by stockholders' equity. It ____________ what ____________ of equity and debt the company is using to ____________ its assets.
A high debt/equity ratio generally means that a company has been ____________ in financing its growth with debt. This can result in ____________ earnings as a result of the additional ____________ expense.
If a lot of debt is used to finance increased operations (high debt to equity), the company could potentially ____________ more earnings than it would have without this outside financing. However, the cost of this debt financing may ____________ the return that the company generates on the debt through investment and business activities. This can ____________ to bankruptcy.
The debt/equity ratio also depends on the industry in which the company ____________. For example, capital-intensive industries such as auto manufacturing ____________ to have a debt/equity ratio above 2, while personal computer companies have a debt/equity of under 0.5.
2. CHECK YOUR SPEAKING
|
equity |
[ʹekwıtı] |
собственный капитал |
|
ratio |
[ʹreıʃıəʋ] |
коэффициент |
|
measure |
[ʹmeʒə] |
мера, критерий |
|
to indicate |
[ʹındıkeıt] |
показывать |
|
proportion |
[prəʹpɔ:ʃ(ə)n] |
часть |
|
to finance |
[ʹfaınæns] |
финансировать |
|
volatile |
[ʹvɒlətaıl] |
неустойчивый |
|
interest |
[ʹıntrıst] |
процент (на капитал) |
|
generate |
[ʹdʒenər(e)ıt] |
производить; генерировать |
|
outweigh |
[aʋtʹweı] |
перевешивать |
|
return |
[rıʹtɜ:n] |
обратная прибыль |
|
to lead |
[led] |
приводить |
|
to operate |
[ʹɒpəreıt] |
работать (о компании) |
|
to tend |
[tend] |
иметь тенденцию |
3. SEE CORRECT ANSWER
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.
A high debt/equity ratio generally means that a company has been aggressive in financing its growth with debt. This can result in volatile earnings as a result of the additional interest expense.
If a lot of debt is used to finance increased operations (high debt to equity), the company could potentially generate more earnings than it would have without this outside financing. However, the cost of this debt financing may outweigh the return that the company generates on the debt through investment and business activities. This can lead to bankruptcy.
The debt/equity ratio also depends on the industry in which the company operates. For example, capital-intensive industries such as auto manufacturing tend to have a debt/equity ratio above 2, while personal computer companies have a debt/equity of under 0.5.
Цей та багато інших цікавих матеріалів Ви знайдете в
підручнику “Practical Financial English”
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