Question

1. Definition of non-current liabilities to equity ratios

2. Why this ratio increase

3. Why this ratio decrease

Answer 1

Non current liabilities to equity:

= Total non current liabilities/share holders equity= (Total Asset-current liability)/share holders equity ;

----This is one of the leverage ratio which indicates how much long term debt a company have compared to its shareholders capital. This is an important ratio to understand the long term debt dependency of a firm.

The ratio will increase if the total long term debt increases or current liability decreases or a decrease in shareholders equity.

The ratio decreases when total long term debt reduces, or current liability increases or there is an increase in shareholders equity through company's operation.