Debt-to-Equity Ratio

The debt-to-equity ratio is a financial measurement that compares a company's total debt to its shareholders' equity. It shows how much of the company's funding comes from borrowed money versus owner investment. A higher ratio indicates more leverage and potentially higher risk, as the company relies more on debt to finance its operations. Conversely, a lower ratio suggests the company is primarily financed by its owners and has less debt, which may be seen as less risky. This ratio helps investors and lenders assess a company's financial stability and how comfortably it can handle its debt obligations.