Credit Analysis: Sanjay Bakshi - Lecture 12

Link to Professor Bakshi's 12th Lecture. He goes over an important lesson and filter from Ben Graham:
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Graham’s Version of Debt-equity ratio:

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Market Value of Enterprise/Debt

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Why not use the conventional Debt/Equity ratio?

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“The market value of stock is generally recognized as a
better index of the fair going concern value of a

business rather than balance sheet figures.”

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The Graham Standard:

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“Minimum stock equity at market prices for industrial bonds

should be at least 75% of total debt. This test must be passed

both currently and over the average of last five years.”

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