For example, if a company has long-term debt of $3,000 and shareholder's equity of $12,000, then the debt/equity ratio would be 3000 divided by 12000 = 0.25.
Also see: List of Important Financial Ratios for Stock Analysis at InvestorGuide.com.
Use debt/equity ratio in a sentence
“ I wanted to know what the company's debt/equity ratio was because it was important for our well being in the company. ”
“ After reviewing their debt/equity ratio they were able to see that they had too much debt and therefore had too little leverage with the banks. ”
“ One of the covenants that a company must meet on their line of credit is a debt/equity ratio so it's important to monitor that throughout the year. ”