Debt/Equity Ratio
Total debt divided by shareholders' equity.
The debt-to-equity ratio measures financial leverage by comparing total borrowings to shareholders' equity. Higher ratios indicate greater reliance on debt financing, which amplifies both returns and risk. Acceptable levels vary by industry — capital-intensive sectors typically carry higher D/E.
Formula
Related Terms
Current Ratio
Current assets divided by current liabilities.
Interest Coverage Ratio (EBIT / Interest)
EBIT divided by interest expense — times interest earned.
Market Capitalization
Share price multiplied by shares outstanding — the total equity value.
Enterprise Value (EV)
Market cap plus net debt — the total acquisition value of the business.
P/E Ratio
Share price divided by earnings per share — how much you pay per dollar of profit.
EV/EBITDA
Enterprise value divided by EBITDA — a capital-structure-neutral valuation metric.