Debt-to-Equity Ratio Calculator
How much of a business is financed by borrowing versus how much is financed by its owners’ own capital.
Debt-to-equity calculator
How much a business relies on borrowed money compared to owners’ own capital.
Educational illustration only. A ratio of 1.0 means equal debt and equity. What counts as a comfortable ratio varies enormously by industry — capital-intensive sectors typically run higher than service businesses.
The formula
Debt-to-Equity = Total Debt ÷ Total Equity. A ratio of 1.0 means debt and equity are equal. A higher ratio means more leverage — higher potential returns to equity holders when things go well, but also higher risk, since debt has to be repaid regardless of how the business performs.
Why there’s no universal “good” ratio
Capital-intensive industries (manufacturing, real estate, utilities) typically run much higher debt-to-equity ratios than service or technology businesses, because they need large amounts of financing for plant, equipment or property that generates steady, predictable returns. Comparing a ratio only makes sense against similar businesses in the same industry, or against the same business’s own trend over time.