What is Debt-to-Equity Ratio?
A business's debt-to-equity ratio, or D/E ratio, is a measure of the extent to which a company can cover its debt. It is calculated by dividing a company's total debt by its total shareholders' equity. The higher the D/E ratio, the more difficult it may be for the business to cover all of its liabilities.
For example: $200,000 in debt/ $100,000 in shareholders' equity = 2 D/E ratio
A D/E can also be expressed as a percentage. In this example, a D/E of 2 also...