Investment for beginners - #13 How to Analyze a Company | Leverage | Current Ratio |Capital Structure?

In this video, we will be discussing the capital structure of a company. These ratios are important especially when you hear the interest rate is going up. If you are invested in a high leverage company then the increasing the rate will destroy its earning abilities thus resulting in a decrease in share price. The important definitions discussed in the video are; Equity to Assets Ratio: It measures the company's financial leverage calculated by dividing its equity by its total assets. A high ratio is good for the company Interest Cover (Times): It defines how easily a company can pay interest on its outstanding debt. A higher interest coverage ratio indicates stronger financial health. Long Term Debt to Equity: It is a leverage ratio comparing the total amount of long-term debt against the shareholders' equity of a company. A high ratio means the company is taking on more debt Current Ratio: It is a ratio used to evaluate the company's ability to pay its short-term obligations due within a year. Less than 1 could be an indicator the company will be unable to pay its current liabilities. These ratios are important in the sense that when the State Bank of Pakistan increases its interest rates, you need to know how much your company is impacted by it. Companies discussed in the video; Lucky Cement https://sarmaaya.pk/psx/company/LUCK Pael Company: https://sarmaaya.pk/psx/company/PAEL Learn more about these definitions in Fundamental Explained Playlist https://www.youtube.com/watch?v=9ZDlYS95luo&list=PL9woZG_Dh0PIoTfL2WRlyf8fvkxmcLWhi