while explaining debt/equity ration, what is equity ? Is it shareholders capital or net worth(shareholders equity)?
you have used share holders capital for this purpose but formula says (Debt/shareholders equity) (reference: http://www.investopedia.com)
In Debt/Equity Ratio, Equity is Shareholders Capital and not net worth.
This ratio helps a Financial Analyst understand how much leverage the company has taken and how much new doubt if at all the company can add.