Check how much a business relies on borrowed money. Enter total liabilities, or just interest-bearing debt, and shareholders' equity to get the debt-to-equity ratio, debt ratio, equity multiplier and debt-to-capital, with a plain-language reading of the result.
Last updated:
Count as debt
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Incl. current portion of long-term debt.
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Total equity from the balance sheet.
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For debt ratio and equity multiplier.
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For net debt to equity.
Enter your values to see the result.
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How to use the Debt to Equity Ratio Calculator
Choose what to count as debt: total liabilities (the textbook D/E) or only interest-bearing debt.
Enter the amounts from the balance sheet: liabilities or short-term and long-term debt, and shareholders' equity.
Optionally add total assets and cash in debt mode for the debt ratio, equity multiplier and net debt.
Read the D/E ratio and the interpretation, then compare with companies in the same industry.
The debt to equity ratio formula
D/E = Total liabilities ÷ Shareholders' equity
Related leverage measures, where assets = liabilities + equity:
Debt ratio = Total liabilities ÷ Total assets = D/E ÷ (1 + D/E)
Debt-to-capital = Debt ÷ (Debt + Equity), usually with interest-bearing debt only
Net debt to equity = (Debt − Cash) ÷ Equity
Example: liabilities of $600,000 and equity of $400,000 give D/E = 600,000 ÷ 400,000 = 1.5. Total assets are $1,000,000, so the debt ratio is 60% and the equity multiplier is 2.5.
Total liabilities or only debt?
The textbook ratio uses all liabilities, including accounts payable, accrued expenses and deferred revenue. Many analysts and data providers use only interest-bearing debt (bank loans, bonds, notes and often leases), which gives a lower number. Both are valid; just compare like with like.
D/E range
Debt ratio
General reading
Below 0.5
Below 33%
Low leverage, mostly owner-financed
0.5 to 1.0
33% to 50%
Moderate leverage
1.0 to 2.0
50% to 67%
Elevated, common in capital-intensive sectors
Above 2.0
Above 67%
High leverage outside financial and utility sectors
These bands are general guidance, not industry benchmarks. Lenders also look at interest coverage and cash flow, because a high D/E is much safer with stable, predictable earnings.
Frequently asked questions
What is the debt to equity ratio formula?
Debt-to-equity = total liabilities ÷ total shareholders' equity. A narrower version uses only interest-bearing debt (short-term debt + long-term debt, sometimes including lease liabilities) instead of all liabilities. Always check which definition a source uses before comparing.
What is a good debt to equity ratio?
There is no single good value. Below about 1 means the company is financed more by owners than by creditors and is often seen as conservative; ratios above 2 indicate heavy use of borrowing. Banks, utilities and real estate companies normally run much higher ratios than software companies, so compare within an industry.
How are D/E, debt ratio and equity multiplier related?
When debt means total liabilities, assets = liabilities + equity, so debt ratio = D/E ÷ (1 + D/E) and equity multiplier = 1 + D/E. A D/E of 1.5 equals a debt ratio of 60% and an equity multiplier of 2.5.
What does a negative debt to equity ratio mean?
It means shareholders' equity is negative: accumulated losses or large buybacks have pushed liabilities above assets. The ratio is then not meaningful for comparison, and the company's solvency should be examined more closely.
What is net debt to equity?
Net debt to equity subtracts cash and cash equivalents from debt before dividing by equity. It reflects the fact that cash could be used to repay debt; a company with more cash than debt has a negative net debt.
Is debt to equity the same as gearing?
Gearing is a broader UK term for financial leverage. It is often calculated as net debt ÷ equity or as debt ÷ (debt + equity), so the numbers can differ from D/E depending on the definition used.
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