Macroeconomics & Investing · Entry 26 of 71

What is Debt to Equity Ratio?

Measuring corporate solvency and leverage on equity

Core Definition

Debt to Equity Ratio (D/E Ratio) is a financial metric that compares a company's total debt to its shareholders' equity.

Core Uses

1. Indicates the proportion of debt used to finance the company's assets: Shows whether operations are backed primarily by debt or investor capital.
2. Helps assess financial leverage and risk: High ratios indicate aggressive expansion using debt, which can be dangerous during interest rate hikes or market downturns.