what is the debt to equity d e ratio 
the debt to equity d e ratio is used to evaluate a company s financial leverage and is calculated by dividing a company s total liabilities by its shareholder equity the d e ratio is an important metric in corporate finance it is a measure of the degree to which a company is financing its operations with debt rather than its own resources the debt to equity ratio is a particular type of gearing ratio investopedia katie kerpelformula and calculation of the d e ratiodebt equity total liabilitiestotal shareholders equity begin aligned text debt equity frac text total liabilities text total shareholders equity end aligned debt equity total shareholders equitytotal liabilities the information needed to calculate the d e ratio can be found on a listed company s balance sheet subtracting the value of liabilities on the balance sheet from that of total assets shown there provides the figure for shareholder equity which is a rearranged version of this balance sheet equation assets liabilities shareholder equity begin aligned text assets text liabilities text shareholder equity end aligned assets liabilities shareholder equity these balance sheet categories may include items that would not normally be considered debt or equity in the traditional sense of a loan or an asset because the ratio can be distorted by retained earnings or losses intangible assets and pension plan adjustments further research is usually needed to understand to what extent a company relies on debt to get a clearer picture and facilitate comparisons analysts and investors will often modify the d e ratio they also assess the d e ratio in the context of short term leverage ratios profitability and growth expectations melissa ling investopedia 2019business owners use a variety of software to track d e ratios and other financial metrics microsoft excel provides a balance sheet template that automatically calculates financial ratios such as the d e ratio and the debt ratio 1or you could enter the values for total liabilities and shareholders equity in adjacent spreadsheet cells say b2 and b3 then add the formula b2 b3 in cell b4 to obtain the d e ratio 