Debt-To-Equity Ratio

What is debt-to-equity ratio?

A debt-to-equity ratio is a ratio calculated by dividing a company’s total liabilities by stockholders' equity. This metric indicates what proportion of equity and debt the company is using to finance its assets. A high debt/equity ratio can indicate that the company has used debt in an aggressive manner to finance its growth. That can lead to greater earning volatility due to additional interest expenses.

Accounting and Financials Glossary >