Treasury Practice

Calculator Corner: debt to equity ratio

Published: May 2021

\(\mathrm{Debt \:to \:equity\:ratio} = \frac{debt}{equity}\)

The debt to equity ratio formula is total liabilities divided by total equity. The debt to equity ratio is a financial leverage ratio. Financial leverage ratios are used to measure a company’s ability to handle its long and short term obligations.
Both debt and equity will be found on a company’s balance sheet and debt may show as total liabilities and equity may show as total shareholder’s equity.

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