Debt-to-Equity Ratio Calculator
Calculate the debt-to-equity (D/E) ratio from total liabilities and shareholder equity to assess financial leverage and risk.
Last reviewed by the Radiatus Cloud team
Calculate the debt-to-equity ratio to measure a company\u2019s financial leverage.
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Calculate the debt-to-equity ratio
The debt-to-equity ratio measures how much a company relies on borrowing versus its own equity to finance its assets. It is calculated by dividing total liabilities by shareholder equity. A ratio of one and a half means the company has one and a half dollars of debt for every dollar of equity. This calculator also shows how the company's capital is split between debt and equity and assesses the level of leverage.
A higher ratio indicates greater reliance on debt, which amplifies both potential returns and risk.
Understanding leverage
The debt-to-equity ratio is a key gauge of financial risk. Moderate leverage can boost returns because debt is often cheaper than equity and interest is tax-deductible, but too much debt makes a company vulnerable to downturns and rising interest rates, since the debt must be serviced regardless of profits. Lenders and investors watch the ratio closely to judge whether a company is financing growth prudently.
What counts as a healthy ratio varies greatly by industry: capital-intensive sectors like utilities and real estate operate with higher leverage than asset-light technology companies. Compare within a sector for meaningful context. All calculation happens locally in your browser.
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Frequently Asked Questions
What is the debt-to-equity ratio?
It is total liabilities divided by shareholder equity, showing how much debt a company uses relative to its own capital.
What is a good debt-to-equity ratio?
It varies by industry. Ratios around one or below are often seen as conservative, while capital-intensive sectors operate higher.
Why can some debt be good?
Debt is often cheaper than equity and interest is tax-deductible, so moderate leverage can increase returns on equity.
Why is high leverage risky?
Debt must be serviced regardless of profits, so heavily indebted companies are more vulnerable to downturns and rising interest rates.
Should I include all liabilities?
The broad ratio uses total liabilities. Some analysts use only interest-bearing debt for a focused view of financial leverage.
Privacy & Security
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How to Use
Enter total debt (liabilities) and shareholder equity.
Disclaimer: This tool is provided "as is" without warranty of any kind. Results are for educational and utility purposes.
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