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What Is the Debt-to-Equity Ratio?
Formula
The debt-to-equity ratio compares a company's total debt to its shareholders' equity.
A higher ratio indicates more leverage and potentially higher risk, while a lower ratio suggests more conservative financing.
Common use cases:
- Evaluating company leverage
- Comparing industry risk levels
- Investment analysis
Frequently Asked Questions
Sarah Chen
Financial Analyst, CFA
Sarah is a Chartered Financial Analyst with over 8 years of experience in investment management and financial modeling. She specializes in retirement planning and compound interest calculations.
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