Measure a company's financial leverage by comparing its total liabilities to shareholder equity.
Capital Structure
Leverage Ratio
Debt-to-Equity Ratio0.50Balanced
Debt vs Equity Split
About this calculator
Overview
Measure a company's financial leverage by comparing its total liabilities to shareholder equity.
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Pro Tips
What is the Debt-to-Equity (D/E) ratio?: It's a financial ratio indicating the relative proportion of shareholders' equity and debt used to finance a company's assets.
What is a 'good' D/E ratio?: It varies by industry. Generally, a ratio below 1.0 is considered safe, while 2.0 or higher is high risk. Capital-intensive industries like utilities often have higher ratios.
What does it mean if the ratio is negative?: A negative D/E ratio happens when a company has negative shareholder equity, meaning its liabilities exceed its assets. This is usually a sign of serious financial distress.
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Fun Facts
"The 'perfect' ratio is industry-dependent; what's normal for a tech startup might be disastrous for a bank."
"A high D/E ratio can often lead to higher potential returns during boom times, but it increases the risk of bankruptcy during downturns."
"Lenders used to look for 1:1 ratios, but modern companies often carry much more debt to fuel growth."
