Which Relationship Between Debt And Shares Is Common For Companies In The Drug Sector?
The average long-term debt / equity (D / E) ratio that applies to companies in the pharmaceutical sector is 70.66 based on 12-month trailing data from May 12, 2015. The drug sector is composed of more specialized industries, including the supply of drugs, drug manufacturers – major manufacturers, drug manufacturers – other, drug-related products and drugs – generic industries.
The D / E ratio measures the financial leverage of a company and is calculated by dividing the total obligations of a company by its equity. If a company has a high D / E ratio, the company tends to have a high debt level per dollar of equity. Some industries are capital intensive, which leads to high D / E ratios. It is generally beneficial for investors to invest in companies with low D / E ratios.
The simple average of the D / E ratio for companies in the drug sector is 70.66, indicating that for every $ 1 in equity, companies in the drug sector have $ 70. 66 in total liabilities. Because the drug sector is very capital intensive, companies in this sector have high D / E ratios.
The drug supply industry is included in the drugs sector and has the highest long-term D / E ratio in the 152 sector. 6. In comparison with the average D / E ratio of the drug sector, investors in The drug delivery industry assumes $ 81.94, or 152. 6 – 70. 66, in debt per $ 1 in equity.
The pharmaceutical manufacturers – major has a long-term D / E of 66. 86. Compared to the long-term D / E ratio of the industrial goods sector, companies in this sector have $ 66. 86 in debt per $ 1 of equity. The pharmaceutical manufacturers – other industries offer the lowest long-term D / E ratio for investors in the pharmaceutical sector. The industry’s long-term D / E ratio is 29. 85. This indicates that for every $ 1 in equity for companies in the drug manufacturers – other industries – companies have an average of $ 29. 85 in debt.