Debt-to-Equity Ratio
Total liabilities divided by shareholders' equity.
What is Debt-to-Equity Ratio?
A leverage gauge. Higher ratios mean more fixed obligations and more fragility in a downturn. Normal levels vary hugely by industry - utilities carry far more debt than software firms.
Debt-to-Equity Ratio: a worked example
$3B debt against $2B equity is a 1.5 debt-to-equity ratio.
More terms in Valuation & Analysis
Market Capitalization
Share price times shares outstanding - the equity value of a company.
Earnings Per Share (EPS)
Net income attributable to each share of common stock.
Price-to-Earnings (P/E) Ratio
Price per share divided by earnings per share.
Dividend Yield
Annual dividends per share divided by share price.
Payout Ratio
The share of earnings paid out as dividends.
Book Value
Assets minus liabilities - the accounting value of equity.
Free Cash Flow
Operating cash flow minus capital expenditures.
EBITDA
Earnings before interest, taxes, depreciation, and amortization.