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I have read Warren Buffet and the interpretation of financial statement. They explained that an important ratio is the Debt-To-Equity Ratio (Total Liabilities / Total Equity). Sometimes this ratio can be misleading. For example, a company with a durable competitive advantage can buy back its own stock, which will lower the total equity and make the ratio higher.

Warren prefers to add back in any Treasury stock that the company acquired through the stock buybacks before calculating this ratio. I know that Coca-Cola Co is one of Warren Buffett's investments. Normally that ratio should be less than 0.8 while it is higher than 3 since at least 3 years. Can someone explain to me how to add back in the stock they bought back to make the ratio more significant?

Coca-Cola's balance sheet:

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Based on your screenshot, the total liabilities for the first column would be $87,296 - $21,284 = $66,012

So if you add the Treasury stick to the total equity, you get $73,300 and a debt/equity ratio of 66,012/73,300 = 0.90

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