Glossary
Debt-to-Equity (D/E) Ratio
Total liabilities divided by shareholder equity.
D/E = Total Debt / Shareholder Equity. A ratio of 1.0 means the firm is funded equally by debt and equity. Higher ratios increase the volatility of returns and the risk of insolvency in a downturn.
Industry context matters. Utilities and REITs run high D/E by design; tech firms typically run near zero. Compare within sector, not across.
A near-zero D/E with sustained operations is a positive signal — the firm earns enough to fund growth without external capital.