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Spireframe Software, makers of Value Investor - the easiest way to learn stock analysis and valuation of stocks. Spireframe Software, makers of Value Investor - the easiest way to learn stock analysis and valuation of stocks.  
Debt to Equity Ratio
 Total Liabilities
 Debt to Equity Ratio =
Total Stockholder's Equity 

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.

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