Debt to equity ratio calculator
This debt to equity ratio calculator divides debt by equity. Example: 450,000 of debt against 300,000 of equity gives a D/E ratio of 1.5 (150%).
Example: Total debt 450,000 · Shareholders’ equity 300,000 → Debt to equity ratio: Debt to equity ratio = 1.5 (150%). Source: Wikipedia – Debt-to-equity ratio. Updated: .
How it is calculated
The debt to equity ratio compares a company’s debt with its shareholders’ equity. It shows how much debt there is for every unit of equity and is one of the core measures of capital structure.
Formula and related ratios
D/E ratio = total debt ÷ shareholders’ equity; multiply by 100 to show it as a percentage. The debt share of capital instead divides debt by total capital (debt plus equity), and the equity share does the same for equity. The two shares always add up to 100%.
Example
Debt 450,000, equity 300,000: D/E = 450,000 ÷ 300,000 = 1.5, or 150%. Total capital is 750,000; the debt share is 60% and the equity share 40%.
- What counts as debt is defined differently (all liabilities or only interest-bearing debt). Comparisons need the same definition.
- If equity is zero or negative the ratio is not defined.
Frequently asked questions
How do you calculate the debt to equity ratio?
Divide debt by equity. With 450,000 and 300,000 that gives 1.5, or 150%.
How does it differ from the debt ratio?
The D/E ratio uses equity as the denominator, the debt share uses total capital. In the example: 1.5 versus 60%.
What D/E ratio is too high?
There is no universal limit. Rules of thumb often mention a range of 1 to 2, but capital-intensive industries and banks differ widely from that.
Sources and legal basis
- Wikipedia – Debt-to-equity ratio
- Wikipedia – Verschuldungsgrad
- Weygandt, Kimmel, Kieso: Financial Accounting – Solvency Ratios
As of: · Editorial policy
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