debit/ equity ratio



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what does this ratio mean?

1 Answer(s)


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Definition of 'Debt/Equity Ratio':

Its not DEBIT/Equity Ratio, its DEBT/EQUITY Ratio.

The Debt/Equity Ratio is a measure of a company's financial leverage calculated by dividing its total liabilities by stockholders' equity. It indicates what proportion of equity and debt the company is using to finance its assets.

Debt/Equity Ratio = Total Liabilities/Shareholders Equity

Note: Sometimes only interest-bearing, long-term debt is used instead of total liabilities in the calculation.

watch this video to learn about this and other financial ratios:
http://www.investopedia.com/video/play/debt-to-equity-ratio/