What is a good Debt-to-Equity ratio?

A Debt-to-Equity (D/E) ratio between 1.0 and 1.5 is generally considered healthy across most commercial industries. A ratio below 1.0 indicates a conservative, equity-heavy capital structure with minimal bankruptcy risk. A ratio above 2.0 signals high financial leverage, which may trigger scrutiny from commercial bank underwriters.

Can a Debt-to-Equity ratio be negative?

Yes. A negative D/E ratio occurs when a company has negative shareholder equity (accumulated losses exceed total paid-in capital). This indicates severe technical insolvency unless subsidized by ongoing venture capital or rapid turnaround cash flows.

Balance Sheet Solvency & Commercial Underwriting

Debt-to-Equity Ratio Calculator

Evaluate capital structure, financial leverage, Debt-to-Equity (D/E) ratios, and bank underwriting solvency metrics across short-term, long-term, and equity accounts.

Balance Sheet Accounts

Liabilities (Debt)Total: $340,000

Short-Term Debt ($)

Long-Term Debt ($)

Accounts Payable & Other Liabilities ($)

Shareholders' Equity (Net Worth)Total: $300,000

Common / Preferred Stock ($)

Retained Earnings ($)

Additional Paid-in Capital ($)

Moderate / Standard Leverage

Debt-to-Equity (D/E) Ratio

1.13x

$1.13 debt per $1.00 equity

Debt-to-Capital %

53.1%

of total financing structure

Long-Term D/E

0.75x

excludes short-term debt

Financial Leverage (Assets/Equity)

2.13x

DuPont equity multiplier

Underwriting Diagnosis: Capital structure is well-balanced. Typical commercial debt profile acceptable to tier-1 banks.

Debt-to-Equity & Solvency Formulas

Total Debt-to-Equity (D/E)

D/E Ratio = Total Liabilities ÷ Total Shareholders' Equity

Measures how much borrowed capital is funding company assets relative to owners' net invested equity.

Debt-to-Capital & Financial Leverage

Debt-to-Capital = [Total Debt / (Total Debt + Total Equity)] × 100

Equity Multiplier = Total Assets / Total Equity = 1 + D/E

Commercial banks evaluate these metrics to ensure loan covenants are not breached during economic contractions.

Related Financial Tools

Interconnected calculations to validate your business economics

View all 90 models →

Debt Coverage

DSCR Commercial Loan Calculator

Verify Debt Service Coverage Ratios for commercial financing and SBA debt underwriting.

Open Calculator

Liquidity

Quick Ratio (Acid-Test) Calculator

Calculate the acid-test ratio, current ratio, cash ratio, and liquid assets excluding merchandise inventory.

Open Calculator

Commercial Debt

Business Loan & SBA 7(a) Calculator

Model monthly amortized debt service, SBA 7(a) guarantee fees, and bank DSCR coverage.

Open Calculator

Returns

Return on Equity (ROE) & DuPont Calculator

Analyze ROE %, 3-step DuPont decomposition (profit margin, asset turnover, financial leverage), and ROA.

Open Calculator