QUOTE(ragk @ May 22 2018, 11:24 AM)
Hi All,
Im new to stock trading, im reading on some Financial Report, trying to figure out the financial status of the company, im abit confuse btw Liability and Assets.
I compared YTL corp and YTL power, i realize 'Total Assets' and 'Total Equity and Liabilities' always has the same value? If they always has same value, how can i determine whether their financial status are on debt or good form?
And to get the debt ratio, i shud use Borrowing/Asset or Liability/Asset?
It is called balance sheet, so both must be balanced.
Eg.
You borrow 1 mil to buy a house that value Rm1 mil
In the account.
Borrowing/liabilities is 1 mil
Asset 1 mil.
So both side will be always the same.
You want to know its total debt, then total up the current debt + long term debt.
Liabilities = current debt + long term debt + all the creditors.
Debt ratio is not the key, it is cashflow (especially operational) that sustain the debt that is most important.
Just like A buy a house 1 mil, debt is 1 mil, but every month earn 50k, the 1 mil debt is not a problem.
While B's debt is 100k, but B earn 1k per month, B is in serious debt problem.