Business finance / Debt-to-Equity Ratio Calculator

Debt-to-Equity Ratio Calculator

Your debt-to-equity ratio from balance sheet figures, using all liabilities or interest-bearing debt only, plus the debt ratio and equity multiplier.
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Loans and credit lines due within a year, including the current part of long-term loans.

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Term loans, equipment loans, mortgages and notes due after one year.

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Accounts payable, accrued wages, taxes owed, customer deposits.

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Total assets minus total liabilities, from the balance sheet.

Debt-to-equity ratio
1.25
$1.25debt per $1 of equity
55.6%debt ratio (liabilities ÷ assets)
2.25×equity multiplier
Short-term debt$40,000.00
Long-term debt$160,000.00
Other liabilities$50,000.00
Debt used in the ratio$250,000.00
Equity$200,000.00
Debt ÷ equity1.25
Total assets · liabilities + equity$450,000.00

Creditors supply $1.25 for every $1 the owners have in the business. What counts as high depends on the industry and the lender.

See breakdown

How the debt-to-equity ratio calculation works

  1. Add up what the business owes

    Short-term debt, long-term debt and other liabilities. $40,000 + $160,000 + $50,000 = $250,000.

  2. Take equity from the balance sheet

    Equity is total assets minus total liabilities. For a sole proprietor or LLC it may be called owner's or members' equity.

  3. Divide debt by equity

    $250,000 ÷ $200,000 = 1.25. Creditors fund $1.25 for every $1 of owner money.

  4. Check which debt your lender means

    Some lenders and analysts count only loans and notes. Switch to interest-bearing debt and the same business shows $200,000 ÷ $200,000 = 1.00.

Worked example. A business with $40,000 of short-term debt, $160,000 of long-term debt, $50,000 of other liabilities and $200,000 of equity has a debt-to-equity ratio of 1.25. Its debt ratio is 55.6% and its equity multiplier is 2.25×.

Debt-to-Equity Ratio FAQ

What is the debt-to-equity ratio formula?

Debt-to-equity = total liabilities ÷ shareholders' equity. $250,000 of liabilities against $200,000 of equity gives 1.25.

What is a good debt-to-equity ratio?

There is no single good number; it depends on the industry and on what your lender requires. As a reference, NYU Stern (Damodaran) data for US listed companies, January 2026, shows book debt to capital of 48.24% for the total market without financial firms, a D/E of about 0.93. Software is 34.14% (about 0.52) and engineering/construction 43.72% (about 0.78). These count borrowings only, so compare them with the interest-bearing debt setting. Large public companies are not small businesses, so treat them as a rough guide.

Should I use total liabilities or only loans?

Both are used. Total liabilities is the common textbook version; many lenders look only at interest-bearing debt. State which one you used when you quote the ratio.

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

It means equity is negative: the business owes more than it owns. The ratio itself isn't meaningful then, and the calculator shows a dash.

What is the debt ratio formula?

Debt ratio = total liabilities ÷ total assets. It divides by assets instead of equity: $250,000 ÷ $450,000 = 55.6%, the same business that has a D/E of 1.25.

What is the equity multiplier?

Equity multiplier = total assets ÷ equity. $450,000 ÷ $200,000 = 2.25×. It always equals 1 + D/E when D/E uses total liabilities: 1 + 1.25 = 2.25.

What is the debt-to-capital ratio?

Debt-to-capital = debt ÷ (debt + equity). With interest-bearing debt only, $200,000 ÷ $400,000 = 50%. It carries the same information as D/E: a D/E of 1.00 is 50% debt to capital.

Sources: NYU Stern (Damodaran): Debt fundamentals by sector (US), January 2026

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