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 Stockholder's 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.