Debt to Equity Ratio
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YCharts Calculation: Debt to Equity = (Long Term Debt + Current Portion of Long Term Debt) / Total Shareholders' Equity
The debt to equity ratio is a leverage ratio indicating the relative proportion of shareholders' equity and debt used to finance a company's assets. It reveals how a company has financed its assets. A low debt to equity ratio indicates lower risk because shareholder's have claims on a larger portion of the company's assets.
A high debt to equity ratio usually means that a company has been aggressive in financing growth with debt and often results in volatile earnings.
It is also known as Debt/Equity Ratio, Debt-Equity Ratio, and D/E Ratio.
Formula
Debt to Equity Ratio = Debt / Shareholders' Equity
Note:
Some sources will calculate Debt to Equity as Total Debt / Shareholders' Equity, and some sources calculate Shareholders' Equity at market value as opposed to book value.
YCharts calculates Shareholder's Equity at book value, not at market value. For Debt, we use (Current Portion of Long Term Debt + Long Term Debt) instead of total debt.
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