- A comparison of two figures used to evaluate business performance (e.g. debt/equity ratio and return on investment). It is a relation in degree or number between two similar things.
Related Terms and Acronyms
- Debt/Equity Ratio — Definition,
- A comparison of debt and equity used to measure the health of a business.
- Equity — Definition,
- Ownership in an asset.
- The value of a property minus outstanding mortgage debt and other liens.
- Gross Debt Service (GDS) — Acronym, Very Important,
➥ Used by mortgage lender underwriters to determine one's ability to qualify for a mortgage loan.
- The total monthly mortgage (or rent) payments, property taxes, utilities and maintenance fees as a percentage of gross monthly income.
- Loan-to-Value (LTV) — Acronym, Very Important,
➥ A widely used term in the mortgage brokerage and lending industry, especially by mortgage underwriters.
- The ratio of the principal amount of the loan to the lesser of the purchase price of the property or the property's appraised value. This can be expressed as an 80% loan, or 80% LTV.
- Overall Liquidity Ratio — Definition,
- A method of determining how easily and quickly a company can sell off assets to pay off its debts.
- Qualifying Ratios — Definition,
- As calculated by lenders, the percentage of income that is spent on housing debt and combined household debt. The first qualifying ratio, called the gross debt service or GDS is up to and including a maximum of 32% of the combined gross family income. The second qualifying ratio is the Total debt service or TDS is up to and including 40% of gross income.
- Quick Liquidity Ratio — Definition,
- A metric used to find if a company has enough liquidity to make it's short term financial obligations.
- Return — Definition,
- Any increase in value or in income you earn on purchase or investment.
- Return on Assets (ROA) — Acronym,
- A ratio that shows how profitable a company is when compared to its assets.
- Return on Equity (ROE) — Acronym,
- A ratio that shows how profitable a company is when compared to shareholder equity.