Debt to Equity Ratio

The debt to equity ratio is a ratio that helps a company understand the weight of total liabilities and debts against the shareholders’ equity. The debt to equity ratio can be calculated using the below formula:

Debt to Equity Ratio = Total Liabilities / Total Shareholder’s Equity

A debt to equity ratio of 1.0 or below is considered safe, whereas a ratio of 2.0 or higher is considered risky.