Debt to Equity Ratio Calculator: Analyze Financial Leverage Instantly
Enter a firm’s total liabilities and shareholders’ equity; the calculator divides the first by the second to display the debt-to-equity ratio. A result above 1 shows more debt than equity, below 1 the opposite. For context, the median D/E across U.S. tech companies is 0.37 (Damodaran, 2023).
Debt to Equity Ratio Calculator
Debt to Equity Ratio
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How to use the tool
Type total liabilities. Example inputs: 310 000 or 42 500.
Type total equity. Example inputs: 155 000 or 85 000.
Press “Calculate”. The tool divides liabilities by equity and shows the ratio to two decimals.
Read the interpretation. You see whether leverage is low (<1), balanced (=1) or high (>1).
Standard formula: Liabilities ÷ Equity (Investopedia, https://www.investopedia.com/terms/d/debtequityratio.asp).
Median D/E for U.S. tech sector: 0.37 (Damodaran, https://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/dbtfund.html, 2023).
D/E above 2.0 often flags elevated default risk (S&P Global Ratings, 2022 Corporate Criteria).
SEC rule 17 CFR 240.13a-13 requires public companies to report quarterly figures (SEC, 2023).
FAQs
What does a D/E ratio below 1 mean?
You finance operations mainly with equity, signalling lower fixed repayment pressure (Investopedia, https://www.investopedia.com/terms/d/debtequityratio.asp).
Is a negative D/E possible?
Yes. Negative equity—often due to accumulated losses—yields a negative ratio and indicates distress (CFI, https://corporatefinanceinstitute.com, 2022).
How often should you recalculate D/E?
Update every quarter for listed firms, aligning with mandatory 10-Q filings (SEC, 2023).
What ratio is “high” in capital-intensive industries?
Utilities and telecoms tolerate ratios up to 2.5 because stable cash flows cover debt service (Moody’s Sector Report, 2021).
Does the formula use market or book values?
The calculator uses book values from the balance sheet; market values suit valuation models like CAPM (IAS 1, 2020).
How does D/E differ from the debt ratio?
D/E compares debt to equity; the debt ratio compares debt to total assets, giving a broader leverage view (Investopedia, URL as above).
Can I apply this to personal finance?
Replace liabilities with personal debt and equity with net worth to gauge household leverage (CFPB Consumer Guide, 2022).
Why does the tool show two decimal places?
Rounding standardizes presentations and eases comparison across periods (FASB ASC 235-10-50-4, 2021).
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