What is Debt-to-Equity Ratio?
Debt-to-Equity (D/E) measures the proportion of a company's funding that comes from debt versus equity. A high D/E means the company is leveraged — which amplifies returns in good times but magnifies losses in bad times. Acceptable D/E varies dramatically by industry: utilities run high, tech runs low.
Formula
D/E = Total Debt ÷ Shareholders' Equity
How TopTier Strategy uses Debt-to-Equity Ratio
D/E is a primary input to our Financial Health pillar, alongside interest coverage and the current ratio.
Related Glossary Terms
Other concepts in the Financial Health pillar.
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