Debt-to-equity ratio
Debt divided by equity; the chosen debt definition should be stated.
Plain languagePractical exampleConnected reading
01
What is it?
Debt divided by equity; the chosen debt definition should be stated.
02
Why does it matter?
It helps compare financial leverage and balance-sheet resilience.
03
How should it be read?
Also review net debt, maturity, interest cost, currency and equity quality.
04
Common mistake
Applying one threshold without considering sector or asset structure.
A simple example
Debt of 300 and equity of 200 imply a ratio of about 1.5x.