How to calculate debt-to-equity ratio in Excel
Calculation of Debt To Equity Ratio: Example 3
What is Debt Ratio?
- For example, asset-heavy industries such as utilities and transportation tend to have higher D/E ratios because their business models require more debt to finance their large capital expenditures.
- For shareholders, it means a decreased probability of bankruptcy in the event of an economic downturn.
- This means that for every $1 invested into the company by investors, lenders provide $0.5.
- A higher D/E ratio means that the company has been aggressive in its growth and is using more debt financing than equity financing.