debt/equity ratio Meaning in the Cambridge English Dictionary Cambridge dictionaries logo

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 ​totalamount of long-termdebt 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/​equityratio 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 ​ratiostood at 0.60:1 and was one of the best among its ​globalpeers.
(Definition of debt/equity ratio from the Cambridge Business English Dictionary © Cambridge University Press)
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