What is Debt-to-Equity Ratio?
A definition of Debt-to-Equity Ratio
“The debt-to-equity ratio is a financial metric showing the proportion of a company’s funding derived from creditors versus shareholders, indicating financial leverage and risk.”

Business Glossary > What is Debt-to-Equity Ratio?
Examples of Debt-to-Equity Ratio in a Sentence:
The debt-to-equity ratio helps assess financial stability.
A lower debt-to-equity ratio often indicates less risk.
Investors use the debt-to-equity ratio to gauge financial leverage.
Why is Debt-to-Equity Ratio Important in Business?
Understanding the debt-to-equity ratio is essential for evaluating a company’s financial health. It helps investors and stakeholders determine the level of risk associated with the company’s financing structure, influencing investment and lending decisions.
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Associated Terms
Here are some associated business terms and synonyms for “Debt-to-Equity Ratio”:
- Leverage Ratio
- Debt Ratio
- Equity Ratio
Tesla’s Debt-to-Equity Ratio
Tesla’s debt-to-equity ratio fluctuates as the company continues to invest heavily in new technologies. By analyzing changes in this ratio, investors gain insights into Tesla’s financial strategies, investor confidence, and operational risks.
Final Notes on Debt-to-Equity Ratio
When considering a company’s debt-to-equity ratio, stakeholders should evaluate the industry norms, company size, and economic conditions to better understand the risks and benefits related to financial leverage.
This has been a definition of Debt-to-Equity Ratio meaning.
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