How To Work Out Debt To Equity Ratio?

Find total debt

Find total equity

Use the formula: Debt-to-Equity Ratio = Total Debt ÷ Total Equity

Add short-term debt and long-term debt to get total debt

Use shareholders’ equity from the balance sheet as total equity

Divide total debt by total equity

Interpret the result as debt relative to equity

A higher ratio means more debt compared to equity

A lower ratio means less debt compared to equity

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