Debt-to-equity calculator
- Formula
- Total debt ÷ Total equity
Debt-to-equity = Total debt ÷ Total equityInterest-bearing borrowings, current and long-term.
Debt-to-equity
0.38×
How it’s worked out
- 1Total debt ÷ total equity$1,500,000 ÷ $4,000,0000.38×
Runs in your browser; nothing you type is sent anywhere. Amounts in US dollars.
Worked on a real month of books
Northwind Traders, Inc., September 2026 (accrual basis, USD), the month the free course is taught on. Northwind is funded entirely by the founders' $60,000 and has borrowed nothing, so the ratio is zero — a real zero, not a missing figure. Every figure is read off the course's posted ledger, not typed.
- 1Total debtNo loans or notes payable$0
- 2Total equityCommon stock + retained earnings$62,550
- 3Debt-to-equity$0 ÷ $62,5500.00×
See the statements these come from in the course.
How to read it
Debt-to-equity compares what lenders have put into the business with what owners have.
A startup funded by equity rounds typically shows little or no debt. Venture debt and revenue-based financing are what move it.
Common mistakes
- Using total liabilities when a covenant defines debt as borrowings.
- Quoting the ratio when equity is negative, where it has no meaning.
Questions
- What is a good debt-to-equity ratio?
- Under 1.0 means the company is funded more by owners than by lenders. Capital-intensive industries run higher; venture-backed startups often near zero.
- Does debt include all liabilities?
- Some analysts use total liabilities. The glossary's formula uses total interest-bearing debt, which excludes payables, accruals and deferred revenue.
Read it with
The metrics read alongside this one, and the terms it is confused with.
- Net debt to EBITDA calculatorLeverage ratio is a leverage and coverage metric, calculated as Net debt ÷ EBITDA (or total debt ÷ EBITDA).Calculator
- Interest coverage calculatorInterest coverage is a leverage and coverage metric, calculated as EBIT ÷ Interest expense.Calculator
- DSCR calculatorDSCR is a leverage and coverage metric, calculated as Cash available for debt service ÷ Debt service (interest + scheduled principal).Calculator
- Debt-to-equityDebt-to-equity is a leverage and coverage metric, calculated as Total debt ÷ Total equity.Term
The formula is the one the glossary states, and the arithmetic is unit-tested. A ratio with nothing to divide by shows a dash — undefined is not zero. General information, not financial advice.