Debt-to-Equity Ratio Calculator
Calculate the debt-to-equity (D/E) ratio from total liabilities, total debt, long-term debt or net debt and shareholders’ equity — with debt-to-capital, debt ratio, equity multiplier, market-value D/E, a target-ratio solver and a comparison with an earlier balance sheet.
How it works
Debt-to-equity ratio = debt ÷ shareholders’ equity, where debt is one of: total liabilities (book D/E) · total debt = short-term debt + long-term debt + leases · long-term debt (+ leases) · net debt = total debt − cash Debt-to-capital = debt ÷ (debt + equity) · Debt ratio = liabilities ÷ assets · Equity multiplier = assets ÷ equity = 1 + liabilities ÷ equity To reach a target ratio t: repay debt − t × equity, or add debt ÷ t − equity of equity
The debt-to-equity ratio compares what a company owes with what its shareholders own, so it shows how much the business relies on borrowed money. A ratio of 1.0 means creditors and shareholders have put in the same amount. Higher leverage can lift returns when business is good, but the interest and repayments are fixed, so losses hit harder when earnings fall or rates rise. There is more than one version. The broad book ratio divides all liabilities, including payables and deferred revenue, by equity. Analysts usually prefer total debt (short-term plus long-term borrowings, often with leases), long-term debt alone, or net debt after subtracting cash, which shows how leveraged the company would be if it used its cash to pay down debt. Pick the measure and the calculator shows the related ratios too: debt-to-capital, the debt ratio, the equity ratio and the equity multiplier used in DuPont analysis. With a market capitalization it adds a market-value D/E. A target ratio shows how much debt would need to be repaid, or new equity raised, to get there. Turn on the comparison to see the change from last year or against a peer. Negative equity makes the ratio meaningless, and the calculator says so instead of giving a misleading number. What counts as high depends on the industry, so compare a company with its peers rather than a fixed line.
Worked example
A company with $80 billion of total liabilities and $50 billion of shareholders’ equity has a book D/E of 80 ÷ 50 = 1.60×: $1.60 of liabilities for every $1.00 of equity, a moderate level. Its assets are $130 billion, so the debt ratio is 61.5% and the equity multiplier 2.60×. If $10 billion of short-term debt, $35 billion of long-term debt and $5 billion of leases make up its borrowings, total-debt D/E is 50 ÷ 50 = 1.00×. Subtracting $15 billion of cash gives net debt of $35 billion and a net D/E of 0.70×. To bring the book ratio down to 1.0×, it would need to repay $30 billion of liabilities or raise $30 billion of equity.
Sources: Corporate Finance Institute — Debt to equity ratio · Wall Street Prep — Debt to equity ratio
Frequently asked questions
What is a good debt-to-equity ratio?
Below about 1.0 is conservative and 1–2 is common for established companies, but it varies a lot by sector. Banks, utilities and real-estate companies routinely run much higher ratios, while many software firms carry almost no debt. Compare with peers and with the company’s own history.
Should I use total liabilities or just interest-bearing debt?
Both are used. Total liabilities give a broad view of everything owed. Total debt, long-term debt or net debt focus on borrowing, which is what lenders and analysts usually mean. Choose the measure under “Debt to use”, and the table shows the versions side by side so you can compare like with like.
What is net debt-to-equity?
Net debt is total debt minus cash and short-term investments. Net D/E shows leverage as if the cash were used to repay debt. It can be negative when a company holds more cash than debt.
What does negative debt-to-equity mean?
If equity is negative, liabilities exceed assets, usually after years of losses or very large buybacks and dividends. The ratio then has no useful meaning, so look at debt ÷ EBITDA, interest cover and cash flow instead.
How is D/E related to the equity multiplier?
Using total liabilities, the equity multiplier (assets ÷ equity) is exactly 1 + D/E, because assets equal liabilities plus equity. A D/E of 1.6 means an equity multiplier of 2.6, the leverage term in the DuPont breakdown of return on equity.
Why is high leverage risky?
Interest and repayments are fixed obligations. If revenue falls, a heavily indebted company still owes the same amounts, which can force cost cuts, asset sales, new shares at low prices or, in the worst case, default.
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Educational estimate, not investment advice. Ratios and valuation models are simplifications; verify figures against official filings and consult a licensed advisor before investing.