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.

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