Debt to Equity Ratio

Quick Definition

Relates the amount of company debt to owners equity, a basic measure of financial risk to stockholders.

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Debt to Equity Ratio Formula

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Calculate Debt to Equity Ratio with our online Debt to Equity Ratio Calculator.

Explanation of Debt to Equity Ratio

The Debt to Equity Ratio compares the company's dollar amount owed to creditors (Total Liabilities) to the dollar amount supplied by investors of the company (Total Stockholders Equity).

Importance of Debt to Equity Ratio

The higher the amount of Total Liabilities, the more risky this company becomes. If the company went bankrupt, the creditors would be paid before the stockholders. Plus the more equity the stockholder's provide, the better protected the creditors are and the more attractive the financial position of this company becomes.

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