Calculation
The debt to equity ratio is calculated by dividing total liabilities by total shareholders’ equity. Both numbers are found on a company’s balance sheet.
Interpretation
The debt to equity ratio is a solvency ratio that describes a firm’s capital structure, i.e. the proportion of debt financing vs. equity financing. Therefore, it is also considered a financial leverage ratio.
In general, the higher the debt to equity ratio, the riskier the firm when it comes to a crisis.
Another thing to consider is the type of debt. Bank debt can be called in anytime, and is therefore the riskiest type of debt.
Thank you for your sharing. I am worried that I lack creative ideas. It is your article that makes me full of hope. Thank you. But, I have a question, can you help me? https://accounts.binance.com/pt-PT/register-person?ref=RQUR4BEO