Ratios guide
How to use the debt-to-equity ratio calculator
Worked example
Debt to equity: calculation example
$180,000 total liabilities divided by $120,000 equity gives 1.5, meaning $1.50 of liabilities for every $1 of equity.
A useful range varies by industry, business age, and lender. Negative or very small equity can make this ratio misleading.
Common question
Understand the result
What if equity is zero or negative?
A zero denominator makes the ratio undefined. Negative equity makes the usual leverage comparison difficult to interpret; inspect the balance sheet directly.