how can the d e ratio be used to measure a company s riskiness 
a steadily rising d e ratio may make it harder for a company to obtain financing in the future the growing reliance on debt could eventually lead to difficulties in servicing the company s current loan obligations very high d e ratios may eventually result in a loan default or bankruptcy the bottom linethe debt to equity d e ratio can help investors identify highly leveraged companies that may pose risks during business downturns investors can compare a company s d e ratio with the average for its industry and those of competitors to gain a sense of a company s reliance on debt however not all high d e ratios signal poor business prospects in fact debt can enable the company to grow and generate additional income but if a company has grown increasingly reliant on debt or inordinately so for its industry potential investors will want to investigate further 