The ratio that is mostly used to determine whether or not a loans officer at the bank would loan a business money is known as the debt-to-equity ratio.
This refers to the ratio that allows to measure of the relative contribution of the creditors and shareholders or owners in the capital employed in business.
The debt-to-equity ratio provides an insight into a company's use of debt. When the company have a high D/E ratio, it is considered a higher risk to lenders and investors because it suggests that the company is financing a significant amount of its potential growth through borrowing.
Therefore, the ratio that is mostly used to determine whether or not a loans officer at the bank would loan a business money is known as the debt-to-equity ratio.
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