Debt to equity ratio

What is Debt to equity ratio?

Debt to equity ratio is the ratio of Total debt to Total equity. This ratio shows the ratio of debt to equity or, in other words, its financial leverage. That is, it shows whether a company’s activities are financed with its own funds or with the help of borrowed funds. In addition, it shows whether it will be able to cover a company's debts if shareholder equity is liquidated.

What does Debt to equity ratio mean?

A high Debt to equity ratio usually indicates that the stock is at risk. However, the values of this indicator must be compared between companies from the same industry in order to be sure.