ON CORPORATE SOCIAL RESPONSIBILITY OF ISLAMIC FINANCIAL INSTITUTIONS BY: SAYD FAROOK

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1. 

   Ummalla

   Can you expand a litlte bit on the 2nd concept of leverage you introduced (D:E), and how it relates to the definition you spoke about at length here (A:E)? Mechanically, I understand you can calc it (A=L+E), and come up with 10:3 (A:E) from 7:3 (D:E). But intuitively, a 10:3 (3.3:1) Assets:Equity ratio makes sense, coz you know you will be insolvent if 1/3rd of your assets go bad. How/where does the D:E ratio help us, intuitively? And if it doesn’t, why don’t ppl exclusively use A:E?Thanks!

   September 10, 2014 at 5:23 pm