Ideal Debt Ratio

i have cash of S$1.1million(exclude fixed asset) with a total debt of S$150,000.

Originally Posted by Reporter

In business, it is considered good to have some gearing (or leverage), and there are acceptable levels of gearing for different industries.

What about for individuals and households? What is the ideal debt ratio for families?

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From [url=://wiki.answers.com/Q/What_is_ideal_debt_to_equity_ratio]What is ideal debt to equity ratio[/ :

"It's common for large, well-established companies to have Debt-to-Equity ratios exceeding 1. For instance, GE carries a Debt-to-Equity ratio of around 4.4 (440%), and IBM around (1.3)130%."

Companies have debt because they don't pay tax on interes (it is called the Modigliani miller theorem) Individuals don't get a tax deduction on interest, so it makes sense to have no or little debt if you have the cash flow to pay it off.

Certainly you should not be carrying any unsecured debt (credit card revolve etc) where the interest rates are 10plus percent