Debt To Equity Calculator

Background.

Everything a company owns was paid for in one of two ways: with money lenders expect back on a schedule, or with money the owners put in or left in the business. The debt-to-equity ratio sets those two sources side by side. At 66.67%, a company has borrowed about 67 cents for every dollar of shareholders' equity on its balance sheet.

Lenders and investors watch it because debt carries fixed claims. Interest falls due whether or not the year was profitable, and creditors rank ahead of shareholders if the business fails. More borrowing magnifies results in both directions: a good year spread over a thin equity base produces a striking return on equity, and a bad year eats into that base quickly. Loan agreements often cap leverage in their covenants for exactly that reason.

There is no single healthy number. Businesses with steady, regulated cash flows, such as electric utilities, routinely carry far more debt relative to equity than a young software company with uneven revenue, so the ratio means most when set against the same company's earlier years or against close competitors.

The figure here divides total interest-bearing debt — bank loans, bonds, notes, drawn credit lines — by total equity and shows the result as a percentage. Accounts payable, accrued wages and deferred revenue stay out of the numerator. Some textbooks and data services use total liabilities instead, which gives a noticeably higher ratio for the same company, so check which definition a published figure uses before comparing it with yours.

Whether lease liabilities, pension deficits or minority interests belong in the debt figure, and whether equity should be taken at book or market value, is left to you: enter the numbers in the form your covenant or analysis calls for.

What is debt to equity calculator?

The debt-to-equity ratio measures financial leverage: how much a company has borrowed relative to the stake its owners hold. Debt here means interest-bearing obligations — bank loans, bonds, notes and drawn credit facilities. Equity is shareholders' equity from the balance sheet, which is total assets minus total liabilities, the book value of the owners' claim. The result is shown as a percentage, so 66.67% is the same leverage as a ratio of 0.67 times.

How to use this calculator.

1. 01Add up interest-bearing debt from the balance sheet: short-term borrowings, the current portion of long-term debt, and long-term debt. Leave out accounts payable, accrued expenses and deferred revenue.
2. 02Enter total assets from the same balance-sheet date. It does not enter the ratio; it is there to catch inconsistent figures, and debt larger than assets is rejected.
3. 03Enter total equity, the line usually labelled total shareholders' or stockholders' equity. It must be positive, because a company with negative book equity has no meaningful debt-to-equity ratio.
4. 04Read the result as a percentage of equity, and divide by 100 for the 'times' form many reports use — 150% is 1.5×.
5. 05Compare it with the same company's earlier balance sheets or with direct competitors, using the same debt definition for each.

The formula.

D/E (%) = D ÷ E × 100, where D is total interest-bearing debt and E is total shareholders' equity, both in dollars and both taken from the same balance-sheet date. Because E sits in the denominator, the ratio reacts sharply when equity is small: a loss that halves equity doubles the ratio without a dollar of new borrowing. A closely related measure, debt-to-capital, is D ÷ (D + E), and the two convert exactly: D/E = d ÷ (1 − d), where d is debt-to-capital. Total assets A plays no part in the arithmetic. It enforces one rule, that D may not exceed A, which follows from the balance-sheet identity A = liabilities + E — with E positive, debt must be smaller than assets.

A worked example.

Frequently asked questions.

References& sources.

1. [1]OpenStax, Rice University. Principles of Finance, 2022. Chapters 6–10. Retrieved 2026-08-06.
2. [2]U.S. Internal Revenue Service. Tax guidance current 2026. Official forms, instructions and tax topics. Retrieved 2026-08-06.
3. [3]U.S. Securities and Exchange Commission. Investor.gov current 2026. Investment products and risk. Retrieved 2026-08-06.