What is my debt to equity ratio?
Enter total liabilities and stockholders' equity from a balance sheet. You get the debt-to-equity ratio, the total assets, and the share of assets paid for with debt.
- Debt-to-equity ratio
- 1.5
Liabilities of $150,000.00 against equity of $100,000.00 give a debt-to-equity ratio of 1.5.
- Debt-to-assets ratio
- 60%
- Total assets
- $250,000.00
Debt-to-equity ratio: 1.5. Liabilities of $150,000.00 against equity of $100,000.00 give a debt-to-equity ratio of 1.5.
The results are estimates for information only. They are not financial, tax, or legal advice. Check the numbers with your lender or a qualified professional before you decide. Terms of use
How to calculate
Computes the debt-to-equity ratio, total liabilities ÷ stockholders’ equity, with total assets and the debt-to-assets ratio.
Example with the default inputs (Total liabilities $150,000.00, Stockholders’ equity $100,000.00): Liabilities of $150,000.00 against equity of $100,000.00 give a debt-to-equity ratio of 1.5.
Method: Debt-to-equity = total liabilities ÷ stockholders’ equity. Total assets = total liabilities + stockholders’ equity. Debt-to-assets = total liabilities ÷ total assets × 100.
- Debt means total liabilities, current and long-term, as in the SEC and OpenStax formulas.
- Stockholders’ equity must be more than $0.
- Arithmetic is exact on the typed decimals; the ratios show to 2 decimals, halves up.
Worked examples
Each example is checked against the calculator on every build.
- Total liabilities $150,000.00, Stockholders’ equity $100,000.00 gives Debt-to-equity ratio 1.5, Debt-to-assets ratio 60%, Total assets $250,000.00.Source: OpenStax, Principles of Finance, 6.4 Solvency Ratios (debt-to-equity = total liabilities ÷ total stockholder equity; debt-to-assets = total liabilities ÷ total assets; Clear Lake Sporting Goods and the debt covenant exercise). https://openstax.org/books/principles-finance/pages/6-4-solvency-ratios: 150,000 ÷ 100,000 = 1.5; U.S. Securities and Exchange Commission, Beginners' Guide to Financial Statements (debt-to-equity ratio = total liabilities ÷ shareholders’ equity; assets = liabilities + shareholders’ equity). https://www.sec.gov/about/reports-publications/beginners-guide-financial-statements
- Total liabilities $600,000.00, Stockholders’ equity $1,800,000.00 gives Debt-to-equity ratio 0.333333, Debt-to-assets ratio 25%, Total assets $2,400,000.00.Source: OpenStax, Principles of Finance, 6.4 Solvency Ratios (debt-to-equity = total liabilities ÷ total stockholder equity; debt-to-assets = total liabilities ÷ total assets; Clear Lake Sporting Goods and the debt covenant exercise). https://openstax.org/books/principles-finance/pages/6-4-solvency-ratios: 600,000 ÷ 1,800,000 = 0.33
- Total liabilities $1,000,000.00, Stockholders’ equity $1,800,000.00 gives Debt-to-equity ratio 0.555556.Source: OpenStax, Principles of Finance, 6.4 Solvency Ratios (debt-to-equity = total liabilities ÷ total stockholder equity; debt-to-assets = total liabilities ÷ total assets; Clear Lake Sporting Goods and the debt covenant exercise). https://openstax.org/books/principles-finance/pages/6-4-solvency-ratios: 1,000,000 ÷ 1,800,000 = 0.55 (printed)
How it works
- Debt-to-equity ratio = total liabilities ÷ stockholders' equity
- Total assets = total liabilities + stockholders' equity
- Debt-to-assets ratio = total liabilities ÷ total assets × 100
Rules:
- Total liabilities are $0 or more. Stockholders' equity must be more than $0. Each amount is at most $1 quadrillion.
- A ratio too large or too small to show as a number gives no answer.
- The arithmetic is exact on the decimals you type. Both ratios show to 2 decimals and money to the cent, with halves rounded up.
Assumptions
- Debt means total liabilities, current and long-term.
- Both amounts come from the same balance sheet date.
Worked examples by hand
Clear Lake Sporting Goods. Liabilities $150,000, equity $100,000. D/E = 150,000 ÷ 100,000 = 1.5. Total assets = $250,000. Debt-to-assets = 150,000 ÷ 250,000 × 100 = 60%.
Before the expansion. Liabilities $600,000, equity $1,800,000. D/E = 600,000 ÷ 1,800,000 = 0.33 (1/3). Total assets = $2,400,000. Debt-to-assets = 25%.
After borrowing $400,000 more. Liabilities $1,000,000, equity $1,800,000. D/E = 1,000,000 ÷ 1,800,000 = 0.56 (5/9 = 0.5556). OpenStax prints 0.55; rounded to 2 decimals it is 0.56.
Other questions people ask
What is the debt to equity ratio?
The debt-to-equity (D/E) ratio compares what a company owes with what its owners have put in and kept. A ratio of 2 means $2 of liabilities for every $1 of stockholders' equity.
How do I calculate the debt to equity ratio?
Divide total liabilities by total stockholders' equity. Clear Lake Sporting Goods had $150,000 of liabilities and $100,000 of equity, so its debt-to-equity ratio was 1.5, or 1.5:1.
Does "debt" mean all liabilities or only loans?
The SEC and OpenStax formulas use total liabilities: bills, wages owed and other current liabilities as well as long-term loans and bonds. Some analysts use only interest-bearing debt, which gives a lower ratio, so check which version you are comparing with.
What is the debt-to-assets ratio?
It is total liabilities divided by total assets, as a percent. Because assets equal liabilities plus equity, the calculator works it out from the same two numbers. Clear Lake's $150,000 of liabilities on $250,000 of assets is 60%.
What is a good debt to equity ratio?
It depends on the industry. Utilities and banks often carry high ratios; software companies often carry low ones. Lenders may set a limit in a loan agreement. In the OpenStax example, a 0.50 limit rules out borrowing $400,000 more, since 1,000,000 ÷ 1,800,000 = 0.56.
Why is there no answer for negative equity?
When liabilities are larger than assets, equity is negative and the ratio has no clear meaning. The calculator needs equity above $0.