debt/equity ratio

(also debt-equity ratio, debt-to-equity ratio)

noun [C]

Definition

› FINANCE a method of measuring a company's ability to borrow and pay back money that is calculated by dividing the total amount of long-term debt by the amount that shareholders have invested. This method can be used by investors to decide whether or not to invest in a company: If the debt/equity ratio is greater than 1, assets are mostly financed through debt; if less than 1, assets are mostly financed through equity. The company’s debt-to-equity ratio stood at 0.60:1 and was one of the best among its global peers.

(Definition of debt/equity ratio noun from the Cambridge Business English Dictionary © Cambridge University Press)

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