Debt-to-Equity Ratio (D/E)
Total liabilities divided by shareholders' equity — measures financial leverage.
What Is Debt-to-Equity Ratio (D/E)?
The debt-to-equity ratio shows how much debt a company uses to finance its operations relative to shareholder equity. A D/E of 1.0 means the company has equal amounts of debt and equity. Higher ratios indicate more leverage and typically more risk.
Formula
D/E Ratio = Total Liabilities / Shareholders' EquityWhy It Matters
High leverage amplifies both gains and losses. Companies with high D/E are more vulnerable to economic downturns and rising interest rates. Very low D/E might mean the company isn't using leverage efficiently.
Typical Ranges: Below 1.0 is conservative. 1.0-2.0 is moderate. Above 2.0 is aggressive. Capital-intensive industries naturally run higher.
Real Examples from Our Database
Based on the latest data in our system. Values may change.
Related Terms
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