Debt to Equity Ratio Calculator

How to Use the Calculator

1. Enter the Total Debt of the company in the first input field.
2. Enter the Total Equity of the company in the second input field.
3. Click the Calculate button to compute the Debt to Equity Ratio.
4. The result will be displayed along with an interpretation of what the ratio means for the company's financial health.

Understanding the Debt to Equity Ratio

The Debt to Equity Ratio is a financial metric that indicates the relative proportion of shareholders' equity and debt used to finance a company's assets. It helps investors and creditors understand the level of financial leverage a company is using.

Interpreting the Results

• A ratio below 0.5 is generally considered healthy, indicating that a company is not heavily reliant on debt.
• A ratio between 0.5 and 1 suggests a moderate level of debt relative to equity.
• A ratio above 1 indicates that a company has more debt than equity, which may pose financial risks.

Example

For example, if a company has a total debt of $500,000 and total equity of $1,000,000, the Debt to Equity Ratio would be calculated as follows:

Debt to Equity Ratio = $500,000 / $1,000,000 = 0.5

This ratio of 0.5 suggests that the company has an equal amount of debt and equity, which is generally considered a healthy financial position.