Total debt of these companies increased 38.3%, from Rs 1,62,157 crore in 2005-06 to Rs 2,24,296 crore in 2006-07. The net worth of these companies increased steadily at 29.9%, from Rs 2,66,358 crore in 2005-06 to Rs 3,46,208 crore in 2006-07.
D/E ratio helps one asses to what extent a company is using the money it borrowed. It is simply obtained by dividing the total debt (total loan funds) of the company by its share holders equity (net worth).
In 2006-07, two major companiesIspat Industries (13.17) and Govind Rubber (27.52)had ratios of thirteen or more. Companies that had a very low D/E ratio in 2006-07 were TCS (0.01), HCL Technologies (0.01) and Philips EI India (0.01).
A significant increase in the D/E ratio was registered by Tisco ( 0.26 in 2005-06 to 0.69 in 2006-07) and Ranbaxy Lab (0.43 to 1.35).