What is the debt to equity ratio?

The debt to equity ratio or debt-equity ratio is calculated by dividing a corporation's total liabilities by the total amount of stockholders' equity: (Liabilities/Stockholders' Equity):1.

A corporation with $1,200,000 of liabilities and $2,000,000 of stockholders' equity will have a debt to equity ratio of 0.6:1. A corporation with total liabilities of $1,200,000 and stockholders' equity of $400,000 will have a debt to equity ratio of 3:1.

Generally, the higher the ratio of debt to equity, the greater is the risk for the corporation's creditors and its prospective creditors.

Free Financial Statements Cheat Sheet

299,388
Subscribers
You are already subscribed. This offer is not available to existing subscribers.
Error: You have unsubscribed from this list.
Step 2: Please check your email.