QUESTION 24 OF 35

What is your familiarity with debt-to-equity ratios? What would you consider a good debt-to-equity ratio?

For this question, your interviewer will look to hear that you understand the basics of calculating a debt-to-equity ratio and why it is used. In your answer, be sure that you talk about the ratio's importance in considering debt financing. If you are familiar with different industries and what is considered a reasonable ratio for each industry, be sure to talk about that because what is reasonable can differ widely between industries.

"I am very familiar with debt-to-equity ratio calculations and know that ratios lower than 1.0 are desired to consider a firm financially stable. When I've worked with ratios exceeding 1.0, I've provided further examinations of the industry and the organisation's stance within the industry to determine their overall risk to provide a win-win situation."

"Simply put, the debt-to-equity ratio is found with two easy figures on a company's balance sheet: their total liabilities and shareholder equity. Swaying away from the norm, I know that the financial and banking industries often have to consider debt-to-equity ratios higher than 2.0 common and acceptable due to the large amounts of loaned money and high financial leverage by those institutions."

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European Investment Bank Mock Interview

What is your familiarity with debt-to-equity ratios? What would you consider a good debt-to-equity ratio?

Unlock all 35 European Investment Bank questions

35 European Investment Bank Interview Questions & Answers