Debt-to-Equity Ratio
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Category:  
Strategic

Measures the proportion of a company’s debt compared to its shareholders' equity.

What it Measures ?

How much debt we use compared to owner’s money.

Relevant StakeHolders 

CFO, Risk Manager

In-depth Use Case / Real-world Example

Debt-to-Equity Ratio is calculated by dividing total debt by total equity. For example, if a company has ₹500,000 in debt and ₹1,000,000 in equity, the ratio is 0.5. A higher ratio indicates more debt and higher financial leverage, which can increase risk but also potential returns. It’s essential for assessing financial risk and capital structure.

KPI Definition

Business Value

Movement Direction

Sample Formula

Total Debt / Shareholders' Equity

Should Aim For
1
2
3
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