What will be the impact on debt to equity ratio if company uses equity method instead of Consolidation method.
I think debt would be lower and equity would be lower due to lack of minority interest hence we can’t comment on debt equity ratio.
please provide your suggestions.
use the numbers provided in the item set to solve such questions.
Otherwise, equity method is most aggressive and sh0ws a nice picture, D/E will will lower under Equity method compared to consolidation.
In general, can we comment on debt equity ratio.
Like in any circumstances, Net profit margin will be higher under equity method.
But in case of debt equity method, debt and equity both are lower under equity method.
Hence we can’t comment in general for debt equity ratio unlike net profit margin. We have calculate,
Am I right?