debt/equity ratio - definition in the Business English Dictionary - Cambridge Dictionaries Online

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English definition of “debt/equity ratio”

debt/equity ratio

noun [C] ( also debt-equity ratio, debt-to-equity ratio)
 
 
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)
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