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Debt/Equity Ratio

   Also found in: Acronyms, Hutchinson 0.04 sec.
Debt/Equity Ratio
A measure of a company's financial leverage calculated by dividing long-term debt by shareholders equity. It indicates what proportion of equity and debt the company is using to finance its assets.

Note: Sometimes investors only use interest bearing long-term debt instead of total liabilities.



Notes:
A higher debt/equity ratio generally means that a company has been aggressive in financing its growth with debt. This can result in volatile earnings as a result of the additional interest expense.

Debt/equity ratio
Indicator of financial leverage. Compares assets provided by creditors to assets provided by shareholders. Determined by dividing long-term debt by common stockholder equity.
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Although the debt/equity ratio is an indicator of a farm's prospects, Christensen hesitates to cite a threshold level.
Pain on the plains by Smith, Darrell / Top Producer
The debt/equity ratio allows you to determine whether the business is overburdened with debt.
Understanding Financial Statements by Tarantino, David P. / Physician Executive
The rather generous German thin capitalization rules (which allow a 9:1 debt/equity ratio for holding companies and a 3:1 debt/equity ratio for operating companies), along with an absence of limits for partnership financing, may make it possible to inject substantial acquisition debt into Germany by using a German acquisition vehicle.
Tax aspects of acquisitions in Germany by Ditsch, Stefan / The Tax Adviser
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