• A debt-to-equity ratio measures a company's financial leverage by comparing total liabilities to its shareholder equity.
• A higher debt-to-equity ratio is often associated with risk, while lower ratios are considered safe.
• Debt-to-equity ratio varies by industry; some like banking and financial services have higher ratios.

Key Points

1. The debt-to-equity ratio measures the proportion of a company’s funding that comes from debt compared to equity.
2. A higher debt-to-equity ratio indicates that a company has more debt relative to its equity, suggesting higher financial risk.
3. A lower debt-to-equity ratio indicates that a company relies more on equity financing and may be considered less risky.