Evaluates a company's financial leverage by dividing total debt (borrowings) by shareholder equity.
Formula: D/E = Total Debt / Total Equity
How to read it: < 1.0 is conservative · 1–2 is moderate · > 2 signals elevated financial risk. Capital-intensive industries (industrials, utilities) routinely operate at 2–4×. A negative value means negative shareholder equity and is rated Bad.
Crucial for understanding how a company is financing its operations—whether heavily reliant on debt or equity.