Chapter 17 Discussion Why is a company's capital structure, as measured by debt and equity ratios, important to financial statement analysts?  

A company's capital structure as measured by bet and equity ratios, important to financial statement analysts because first financial statement help companies make better decisions. The debt to equity ratio shows the percentage of a company that comes from creditors and investors. A high debt to equity ratio indicates that a company may not be able to produce enough cash to satisfy its debt obligations. The debt to asset ratio is very important in determine the financial risk of a company. A ratio greater than 1 can indicate that a high portion of assets is funded with debt and the company can face default risk.