What is Common Stock Ratio?

The common stock ratio refers to the percentage of assets represented by common stocks in total assets.

Common stock ratio

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The common stock ratio refers to the percentage of assets represented by common stocks in total assets.

Common Stock Ratio (COMMONSTOCKRATIO)

From a creditor's perspective, the higher the ratio, the greater the company's safety in liquidation (LIQUIDATON). From an investor perspective, a high ratio means a lack of leverage. The level of this ratio depends largely on the stability of the company's earnings. As a general rule, when the common stock ratio of a company in an industry is less than 30%, whether in good or bad conditions, analysts must check the stability of the company's income and the range of fixed expenses.