Remove Debt to Equity Ratio Remove Management Remove Operations Remove Short-term
article thumbnail

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 microfinance, just as in corporate finance, one of the key ratios driving investors is the debt-to-equity ratio.

article thumbnail

End the Religion of ROE

Harvard Business Review

The revolution ran on equity capital, which was in short supply. Anyone would have concluded that allocating capital according to expected return on equity would be optimal for growth. The lesson: Return on Equity, like peacock tail splendor, is a very poor guide for allocating resources. It fails for two reasons.

ROE 12