Debt to Equity Calculator
A company’s debt-to-equity ratio from its balance sheet, with the debt ratio, the equity multiplier and the long-term debt version beside it.
Result
Debt to equity: 1.5
A snapshot on one balance sheet date. No healthy ratio is given: it differs widely between industries.
- Debt ratio, liabilities to assets
- 60%
- Equity multiplier
- 2.5
- Total assets
- $250,000.00
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Results are arithmetic estimates based on the assumptions you enter, not accounting, tax, investment or lending advice. Forecasts can be wrong and important decisions should be checked with a qualified adviser. Read the full disclaimer
How to use the Debt to Equity Calculator
- Enter total liabilities from the balance sheet.
- Enter shareholders' equity from the same balance sheet.
- Optionally enter how much of the liabilities is long-term debt.
- Read the debt-to-equity ratio, the debt ratio, the equity multiplier and total assets.
The formulas
debt to equity = total liabilities ÷ shareholders' equitydebt ratio = total liabilities ÷ total assetsequity multiplier = total assets ÷ shareholders' equitytotal assets = total liabilities + shareholders' equitylong-term debt to equity = long-term debt ÷ shareholders' equityThe three ratios describe one fact from three sides. If D/E is the debt-to-equity ratio, the equity multiplier is 1 + D/E and the debt ratio is D/E ÷ (1 + D/E), so a ratio of 1.5 is always an equity multiplier of 2.5 and a debt ratio of 60%.
Where the definitions come from
The debt-to-equity and debt-to-assets ratios are as OpenStax Principles of Finance defines them in its section on solvency ratios, and the equity multiplier as in its DuPont section. OpenStax averages the opening and closing balance sheets for the equity multiplier, because it is paired there with a year’s income; this page uses a single date, as the other two ratios do.
What the diagram shows
Liabilities beside equity. The debt-to-equity ratio is how many times the equity bar fits into the liabilities bar.
With your numbers
- Debt to equity = $150,000.00 ÷ $100,000.00 = 1.5
- Total assets = $150,000.00 + $100,000.00 = $250,000.00
- Long-term debt to equity = $50,000.00 ÷ $100,000.00 = 0.5
Quick reference
A snapshot on one balance sheet date. No healthy ratio is given: it differs widely between industries.
| Example | Debt to equity |
|---|---|
| 150,000 and 100,000, long-term 50,000 | 1.5 |
| 150,000 and 100,000, totals only | 1.5 |
| Equity heavy: 40,000 and 360,000 | 0.11 |
| Highly leveraged: 900,000 and 100,000 | 9 |
| No liabilities | 0 |
| Negative equity |
Common questions about the Debt to Equity Calculator
- What does a debt-to-equity ratio of 1.5 mean?
- The business owes 1.50 for every 1.00 its owners have in it. With 150,000 of liabilities and 100,000 of equity, creditors have financed 60% of the assets and the owners 40%.
- Should I use total liabilities or only debt?
- Both are in use, which is why a ratio quoted without its definition is hard to compare. This page leads with total liabilities, the definition in OpenStax Principles of Finance, which counts everything owed, including suppliers and wages. Enter long-term debt as well to see the narrower version, which counts only borrowing due after a year.
- What is a good debt-to-equity ratio?
- This page does not give one. Banks, utilities and property companies run far higher ratios than software firms, by the nature of the business, and lenders set their own limits. Compare a company with its own past and with close competitors.
- What if equity is negative?
- Then the liabilities are larger than the assets and the ratio has no sensible reading; dividing by a negative number would make more debt look like less. The page leaves the equity ratios blank and still shows the debt ratio.