Free Debt-to-Equity Ratio Calculator
Calculate the debt-to-equity ratio to understand how a company finances its operations through debt versus shareholder equity.
Debt-to-Equity Ratio
0.67
Debt-to-Equity Ratio vs Total Debt (Liabilities)
How to Calculate Debt-to-Equity Ratio
Formula
Debt-to-Equity Ratio = Total Liabilities / Total Shareholder Equity
This ratio reveals how much of the company is funded by borrowed money relative to owner investment. A D/E of 1.0 means equal parts debt and equity. Higher values indicate greater financial leverage, which amplifies both gains and losses. Lenders and investors watch this ratio closely when assessing creditworthiness.
Example Calculation
A company carries $400,000 in total debt and $600,000 in shareholder equity.
- 01D/E Ratio = $400,000 / $600,000 = 0.67
- 02Equity portion = $600,000 / $1,000,000 = 60%
- 03Debt portion = $400,000 / $1,000,000 = 40%
- 04The company uses $0.67 of debt for every $1 of equity.
Frequently Asked Questions
Learn More
How to Calculate Profit Margin
Learn how to calculate gross, operating, and net profit margins step by step. Understand what healthy margins look like across industries and how to improve yours.