Debt-to-equity ratio
financial ratio indicating the relative proportion of shareholders' equity and debt used to finance a company's assets
A company's debt-to-equity ratio (D/E) is a financial ratio indicating the relative proportion of shareholders' equity and debt used to finance the company's assets. Closely related to leveraging, the ratio is also known as risk ratio, gearing ratio or leverage ratio. The two components are often taken from the firm's balance sheet or statement of financial position (so-called book value), but the ratio may also be calculated using market values for both, if the company's debt and equity are publicly traded, or using a combination of book value for debt and market value for equity financing.
Usage
Preferred stock can be considered part of debt or equity. Attributing preferred shares to one or the other is partially a subjective decision but will also take into account the specific features of the preferred shares.
When used to calculate a company's financial leverage, the debt usually includes only the Long Term Debt (LTD). Quoted ratios can even exclude the current portion of the LTD. The composition of equity and debt and its influence on the value of the firm is much debated and also described in the Modigliani–Miller theorem, published in 1958.
Financial economists and academic papers will usually refer to all liabilities as debt, and the statement that equity plus liabilities equals assets is therefore an accounting identity (it is, by definition, true). Other definitions of debt to equity may not respect this accounting identity, and should be carefully compared. Generally speaking, a high ratio may indicate that the company is much resourced with (outside) borrowing as compared to funding from shareholders.
“Debt-to-equity ratio” enters the record as financial ratio indicating the relative proportion of shareholders' equity and debt used to finance a company's assets. Crown Archives preserves that source wording while asking what Debt-to-equity, ratio and financial can confirm, complicate or overturn.
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Contemporary correspondence, administrative files and participant testimony can test how later narratives organized the event or institution. The source revision retrieved here is dated Mar 22, 2026. The linked authority identifier is Q167064. None of the 0 selected statements returned an explicit reference. The first chronological checks are 1958.
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