The debttoequity ratio is a measure of a company's financial leverage that relates the amount of a firms' debt financing to the amount of equity financing. It is calculated by dividing a firm's total liabilities by total shareholders' equity.
Because some industries tend to use more debt financing than others, it generally is not helpful to compare the debttoequity ratio of companies from different sectors. A company in the industrial goods sector, for example, is likely to have a much higher debttoequity ratio than a company in the basic materials sector. Average debttoequity ratios also vary within the sector by industry. In the consumer goods sector, for example, the electronic equipment industry tends to have lower debttoequity ratios than the beverages/soft drinks industry.
Consider a company with a debttoequity ratio of 50.00. In the basic materials sector, which as of June 2014 had an average debttoequity ratio of 44.04, this would be a bit high. But in the industrial goods sector, which had a debttoequity ratio of 362.27 at the same time, a ratio of 50.00 would be low. Comparing only the debttoequity ratios of companies from different sectors will not provide investors with an accurate picture, and other measures should be used before making any investment decisions.

What is considered a high debttoequity ratio and what does it say about the company? ...
Learn how to make sense of the debttoequity numbers of a company when looking for good investment opportunities. Read Answer >> 
What is the formula for calculating the debttoequity ratio?
The debttoequity ratio shows the proportion of equity and debt a firm is using to finance its assets, and the extent to ... Read Answer >> 
A company issues some shares in order to finance the purchase of some more production ...
The correct answer is: a) This transaction will increase the assets of the company and its equity by the same amount. Hence, ... Read Answer >> 
What debt/equity ratio is typical for companies in the insurance sector?
Learn about the average debttoequity ratio among insurance providers. Find out about the ranges of D/E among insurers and ... Read Answer >> 
What is the difference between the capital adequacy ratio and the leverage ratio?
Explore what differentiates the capital adequacy ratio from any one of several leverage ratios used for equity evaluation ... Read Answer >> 
Which leverage ratios are most useful for analyzing manufacturing companies?
See which leverage ratios investors and creditors are likely to use when analyzing the debt burdens for manufacturing companies. Read Answer >>

Investing
What Is Considered A High DebtToEquity Ratio?
The debttoequity ratio divides a firm’s liabilities by its shareholders’ equity to measure its financial leverage. 
Investing
Debt Reckoning
Learn about debt ratios and how to use them to assess a company's financial health. You could save a lot of money! 
Investing
Understanding Leverage Ratios
Large amounts of debt can cause businesses to become less competitive and, in some cases, lead to default. To lower their risk, investors use a variety of leverage ratios  including the debt, ... 
Investing
What is the Gearing Ratio?
Gearing ratios are financial ratios that measure a company’s leverage. 
Investing
Stocks with Big Dividend Yields: 'It's a Trap!'
Should you seek high yieldingdividend stocks in the current investment environment? 
Investing
Useful Balance Sheet Metrics
These metrics can help you better understand the information found on balance sheets. 
Investing
5 MustHave Metrics For Value Investors
Focusing on certain fundamental metrics is the best way for value investors to cash in gains. Here are the most important metrics to know. 
Investing
4 Simple Investing Ratios You Need To Know
Dissecting a company’s financial statements to uncover ways to make money is a challenging endeavor. Here are four ratios that can help. 
Investing
Analyzing AT&T's Debt Ratios in 2016 (T)
Learn about AT&T Inc. and its key debt ratios, such as the debttoequity ratio, interest coverage ratio and cash flowtodebt ratio. 
Investing
6 Basic Financial Ratios And What They Reveal
Here's a brief introduction to six financial ratios every investor should be familiar with.

Optimal Capital Structure
The best debttoequity ratio for a firm that maximizes its value. ... 
Accounting Ratio
A way of expressing the relationship between one accounting result ... 
Leverage Ratio
Any ratio used to calculate the financial leverage of a company ... 
Current Ratio
The current ratio is a liquidity ratio measuring a company's ... 
Ratio Analysis
A ratio analysis is a quantitative analysis of information contained ... 
Debt Ratio
A financial ratio that measures the extent of a company’s or ...