Is eBay’s debt/equity ratio lower than Lowe’s?

Is eBay’s debt/equity ratio lower than Lowe’s? It is important for a financial analyst to analyze various financial ratios. There are many profitability ratios to choose from such as the profit margin on sales, the basic earning power ratio, the return on total assets (ROA), and return on common equity (ROE). There are many management efficiency ratios to choose from such as the inventory turnover ratio, the days sales outstanding ratio, the fixed assets turnover ratio, and the total assets turnover ratio. There are many leverage ratios to choose from such as the total debt to total assets ratio, the times-interest-earned ratio, and the EBITDA coverage ratio. Regarding other types of ratios, there are various liquidity and market value ratios to choose. For liquidity ratios, there’s the current ratio and the quick ratio. For market value ratios, there is the price/earnings ratio, the price/cash flow ratio, and the market/book ratio.

SAMPLE SOLUTION

Debt/Equity Ratio
Debt equity ratio is an indicator of how much debt a company uses in order to finance most of its assets when compared to the value of the equity of shareholder’s. It is obtained by dividing the total liability of a company by the shareholder’s equity. In financial statements, such numbers are obtained from the company’s balance sheet (Feng, 2017). The importance of this ratio is to evaluate the financial leverage of a company. In other words, the ratio underscores the ability that a company has in financing most of its short and long term operations.
For eBay, the last 13 years have seen it obtain the highest debt to equity ratio set at 1.47 while the lowest ratio has been reported as 0.01, the median ratio within this time has been 0.13. This highest reported ratio has been for the company’s quarter which ended in December 2018. The value of this ratio ranks eBay lower than some of the other industry players even though higher…