Explain the Debt Ratio and Its Use in Analyzing a Company's

question 224

Essay

Explain the debt ratio and its use in analyzing a company's financial condition.

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Definitions:

Par Preferred Stock

Preferred shares of stock issued at a specified nominal value, known as the par value.

Common Stock Warrants

Financial derivatives that give the holder the right, but not the obligation, to buy a company’s common stock at a specified price within a certain time frame.

Preferred Stock

A class of ownership in a corporation that has a higher claim on assets and earnings than common stock, often with fixed dividends.

Additional Paid-in Capital

The amount paid by investors for shares above the par value, reflecting excess funds received over the stated capital.