Meaning of “debt/equity ratio” in the English Dictionary


"debt/equity ratio" in Business English

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debt/equity rationoun [ C ]

also debt-equity ratio, debt-to-equity ratio uk us

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” from the Cambridge Business English Dictionary © Cambridge University Press)