Definition

The Debt-to-Equity (D/E) ratio measures the proportion of debt relative to shareholders' equity. A lower D/E generally indicates lower financial risk and greater stability, while a higher D/E suggests more reliance on debt financing. The ideal level varies by industry — tech companies often have low D/E ratios (0.1–0.5), whereas capital-intensive industries like utilities typically carry higher ratios (0.8–2.0). A negative equity makes D/E not meaningful and may signal financial distress.