# Debt-to-Equity Ratio

*Accounting & Reporting — Finicade finance glossary*

Debt-to-equity compares borrowed capital to owners' capital — the standard leverage measure. What counts as high is entirely industry-dependent: a utility with stable regulated cash flows can carry ratios that would destroy a software company. Because equity is a book value that can be distorted by buybacks and writedowns, coverage ratios based on cash flow are usually the better test.

**Formula:** `D/E = Total debt ÷ Shareholders' equity`

**Also known as:** D/E ratio, gearing ratio, debt to equity

**Related terms:** [Leverage](https://finicade.com/glossary/leverage), [Interest Coverage Ratio](https://finicade.com/glossary/interest-coverage-ratio), [WACC](https://finicade.com/glossary/wacc), [Shareholders' Equity](https://finicade.com/glossary/shareholders-equity), [Financial Ratios](https://finicade.com/glossary/financial-ratios)

Source: https://finicade.com/glossary/debt-to-equity-ratio