The debt-to-equity (D/E) ratio indicates how much debt a company is using to finance its assets relative to the value of shareholders' equity.
 | | Term of the Day | Words to Know | | |  | | Debt-To-Equity Ratio – D/E | The debt-to-equity (D/E) ratio is calculated by dividing a company's total liabilities by its shareholder equity. These numbers are available on the balance sheet of a company's financial statements.
The ratio is used to evaluate a company's financial leverage. The D/E ratio is an important metric used in corporate finance. It is a measure of the degree to which a company is financing its operations through debt versus wholly-owned funds. More specifically, it reflects the ability of shareholder equity to cover all outstanding debts in the event of a business downturn.
The debt-to-equity ratio is a particular type of gearing ratio. | | Read More » | | Related to "Debt-To-Equity Ratio – D/E" | | | | Gearing Ratio | | The gearing ratio is a measure of financial leverage that indicates the degree to which a firm's operations are funded by equity versus creditor financing. | | Read More » | | | Leverage Ratio | | A leverage ratio is any one of several financial measurements that look at how much capital comes in the form of debt, or that assesses the ability of a company to meet financial obligations. | | Read More » | | | Leverage | | Leverage results from using borrowed capital as a source of funding when investing to expand a firm's asset base and generate returns on risk capital. | | Read More » | | | | | | CONNECT WITH INVESTOPEDIA | | | | | | | |
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