Metric
Debt-to-Equity
How much the company borrows relative to shareholder capital.
Formula
Total Debt ÷ Total Shareholders' Equity
Definition
This ratio compares borrowed money against equity invested by shareholders. It's a core measure of how levered a balance sheet is.
Why it matters
Debt amplifies both gains and losses. Low and stable ratios give a company flexibility in downturns; rising leverage can be a warning sign.
Building blocks
- Total Debt
- All money the company has borrowed, short and long term.
- Shareholders' Equity
- Book value owned by shareholders after subtracting liabilities.
Educational information only, not investment advice. Turtleway helps you understand what a metric or concept means; it does not tell you what to buy or sell.