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The Microfinance Contagion Scenario

Harvard Business Review

Losses in AP will overwhelm many institutions' equity cushion. The average debt-to-equity ratio of the 10 largest MFIs in India is 7.06 , indicating an average 12% equity cushion. In a recent paper, Jonathan Morduch and Jonathan Conning explain the role of debt and equity financing in the microfinance industry.

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A Refresher on Current Ratio

Harvard Business Review

If your business has $2,750 in current assets and owes $1,174 in current liabilities (again, you can pull these figures from your company’s balance sheet) then the current ratio is: (Note that the ratio isn’t usually expressed in a percentage). ” But the ratio can also be too high. . Give it back to us.”

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End the Religion of ROE

Harvard Business Review

Anyone would have concluded that allocating capital according to expected return on equity would be optimal for growth. The ability to do that rose to a new level in 1917, when General Motors was in financial difficulty and DuPont took a major position in the company. (GM Then banking regulations were imposed.

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