Cernarus

Debt to Equity Ratio Calculator

This calculator computes the debt-to-equity ratio using values taken from a company's balance sheet. Enter total liabilities and total shareholders' equity to produce the primary ratio (debt divided by equity), a percentage representation, and the inverse (equity divided by debt).

Intended users include financial analysts, business owners, and auditors who need a quick, verifiable check of financial leverage. Use consolidated figures consistently and ensure comparable reporting periods when benchmarking.

Updated Nov 1, 2025

Inputs

Results

Updates as you type

Debt-to-Equity Ratio (debt ÷ equity)

0.5

Debt-to-Equity (percentage)

5000.00%

Equity-to-Debt (equity ÷ debt)

2

OutputValueUnit
Debt-to-Equity Ratio (debt ÷ equity)0.5—
Debt-to-Equity (percentage)5000.00%—
Equity-to-Debt (equity ÷ debt)2—
Primary result0.5

Visualization

Methodology

The tool performs a direct arithmetic calculation using the inputs supplied. It assumes liabilities and equity are measured in the same currency and for the same reporting date.

Data validation: total liabilities must be non-negative. Shareholders' equity can be negative (deficit) — the calculator returns results but flagging and interpretation guidance are provided in FAQs. For best practice, use audited or internally reconciled balance-sheet figures.

Quality and trust controls: users should follow organizational data governance and traceability practices. Relevant standards for secure and reliable measurement and data handling include NIST guidance for data integrity, ISO 31000 for risk considerations, ISO 9001 for quality management controls, and IEEE numerical-computation best practices. These are cited below for implementation-level guidance.

Worked examples

Example 1: Total liabilities = 100,000; Shareholders' equity = 200,000. Debt-to-Equity = 0.5 (50%). Equity-to-Debt = 2.0.

Example 2: Total liabilities = 500,000; Shareholders' equity = -50,000 (equity deficit). The calculator returns a negative ratio; interpret negative equity as a solvency warning and consult accounting standards and advisors.

Further resources

Expert Q&A

What does a high debt-to-equity ratio mean?

A higher ratio indicates greater financial leverage and reliance on debt financing. Acceptable ranges vary by industry; compare against sector peers and consider interest coverage, cash flow stability, and covenants.

What if shareholders' equity is zero or negative?

If equity is zero, the ratio is mathematically undefined and the tool flags the condition. Negative equity produces a negative ratio, which typically signals accumulated losses or accounting adjustments. Such cases require review of retained earnings, capital contributions, and any off-balance-sheet items.

Should I use consolidated or standalone numbers?

Use consolidated financial statements for group-level analysis. If analyzing a single legal entity, use standalone figures. Be consistent when comparing companies or periods.

How precise are the results and what rounding does the tool use?

Results are direct arithmetic outputs based on inputs. The calculator returns decimal and percentage views; users should round to appropriate significant figures for reporting. For regulated reporting, follow precision requirements in your accounting framework and internal control policies.

Can this replace formal accounting or regulatory reporting?

No. This calculator is a decision-support tool and is not a substitute for professional accounting, audit, or regulatory filings. For compliance and reporting, follow applicable accounting standards (GAAP/IFRS) and institutional policies.

What data governance practices should I follow when using this tool?

Ensure traceable source documents, version control for financial statements, and access controls. Apply integrity checks (reconciliations) and retention policies consistent with organizational and regulatory requirements. Refer to cited standards for recommended controls.

Sources & citations