Compares interest-bearing debt with owner equity. Formula: Total Debt ÷ Total Equity. A lower ratio generally indicates less financial leverage. If equity is zero or negative, the ratio is not meaningful.
How to calculate it
Debt-to-equity ratio = interest-bearing debt ÷ owner equity in a common interpretation. Debt and total liabilities are not interchangeable.
If interest-bearing debt is $140,000 and equity is $200,000, the ratio is 0.70.
Where this connects to Impresa
You may encounter this concept when reviewing Financial Health. Start with the underlying inputs and check the applicable reporting period before interpreting the result.
Read the Financial Health guideDefinitions here explain the concept. Accounting treatments, formulas, and industry comparisons may vary. Use your own records and qualified advice for material decisions.