The annual GDP growth as observed for the country indicates that after a decline around 2009-2010, the GDP has once again peaked, but as of 2016, a slowdown is indicated. Now these elements of understanding of GDP will show what form of a debt to equity risks that companies in the United Kingdom might understand to be acceptable and what they would hold as being risky.
Debt and debt equity ratios are two measurements that are used alongside the capitalization ratio. In the case of the debt ratio, the total liabilities are assessed in parallel to the total assets. Where there are more liabilities, then the logical conclusion is that there is less equity and this hence results in a better leveraged position. However, this form of measurement to understand capital structuring is usually to have a very broader scope and therefore other form of calculations to understand operational and debt liabilities is necessity. The debt/equity ratio is helpful here; however a similar issue also arises here, which is that the debt/equity ratio might end up comparing the total liabilities across debt liabilities. However, the current and non-current operational liabilities are seen to exist here and this makes it possible for no fixed payments in interest to be adjusted into the structuring, as would have been the case if one were to hold it under operational liabilities. In this context, in capital structuring, it becomes necessary for formulating the capitalization ratio (Chand, 2017). Here the debt component is a total sum of all the capital usage obligations such as the debt component in capital structure, plus the shareholder equity components in such a case. Now as a total sum, it would be possible to view a percentage indicating good health equity versus high debt situation. In addition to these basic equity elements, the capital structuring would also be dependent on the funded debt. The funded debt is the long-term debt of a company and usually comprises fixed maturity borrowings, has long term borrowings and more. These are obligations that are somewhat complex. The person or corporate entity holding such a funded debt will not be able to demand payment on it. Funded debt is seen to give corporate entities better space. Some of the firm level variables that would be thus used in calculating the debt equity ratios for companies are the net sales, the depreciation values, amortisation, the gross income, operating income and sales.