What is Debt-to-equity ratio?

The debt-to-equity ratio is a financial ratio that measures the proportion of a company's debt to its equity. It is calculated by dividing a company's total liabilities by its shareholder equity. The higher the debt-to-equity ratio, the more leveraged a company is, which means it has a higher proportion of debt relative to equity. A high debt-to-equity ratio may indicate that a company is using a lot of borrowed money to finance its operations, which can increase its financial risk. A low debt-to-equity ratio, on the other hand, may indicate that a company is using a greater proportion of equity financing, which can be less risky for shareholders.