Friday, September 9, 2011

Re: [ vuZs.net ] Most repeated Questions in VIVA

Bench Mark for Ratio
 
I agree with Nida..
 
But for the bench mark it need to be clear that standard for the ratio may vary from industry to industry as well. For example r debt/equity ratio of 2 is normally maintain by the auto manufacturing while of personal comoputer companies maintain it as 0.5
 
The bank is a special case as mostly the money come in the form of deposits. These deposits creates liability  and will not considered as equity and in turn it increases the debt portion. So certainly the ratio will be even higher for the banks.
so ratio values as standard may vary from industry to industry.
 
Regards
Hasnain Mehmood
Wah Cantt

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