What is the Debt to Equity Ratio Template and why is it important in a business plan for a Full Service Restaurant?
The Debt to Equity Ratio is a key ratio that is looked at by lenders and potential partners alike. The Debt to Equity ratio gives a small business owner like Jack Gordon the ability to present this key ratio in both numerical and graphical format to the readers of the business plan. The Debt to Equity ratio calculates the amount of leverage being employed by the firm when compared to the amount of equity invested by the owners of the firm.
As a general rule the lower the Debt to Equity firm, the better is it is for a small business like A Touch of Tuscany and vice versa. This ratio is calculated by dividing the Total Liabilities or Debt by the Total Shareholders equity.
What calculations go into the Debt to Equity Ratio Template for a small business like A Touch of Tuscany?
There are only two inputs that have to be entered into the Debt to Equity Ratio template input page. One is of course the Total Debt on the balance sheet of a small business like A Touch of Tuscany and the other is the total shareholders equity which is of course the contribution of the shareholders along with the retained earnings. Once these items are entered, the template automatically updates the projected Debt to Equity ratio and then updates the graphic. You can click on the output tab and copy and paste the output directly into the business plan word document.
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