What is debt-to-equity ratio? | How to interpret D/E ratio? | How to analyze company’s risk using the debt-to-equity ratio?
The debt-to-equity ratio (aka debt to equity ratio or D/E ratio or debt-equity ratio) is one of the most vital metrics and a leverage ratio to analyze the financial stability of a company and its business. Company’s total interest bearing liabilities (debts) is compared with the total of shareholders equity of company. The liabilities may be short term or long term or both. The D/E (debt to equity) ratio is used most widely among investors, analysts and lenders to assess the financial health of company’s business. Strategic and appropriate management of debt can help businesses for growth.