This debt to equity ratio calculator estimates the financial leverage ratio which is the proportion of liabilities and debts of a company against its equity. There is in depth information on the debt to equity formula below the tool.

Total liabilities:*
Equity value:*

## How does this debt to equity ratio calculator work?

The algorithm of this debt to equity ratio calculator applies the formula explained here that considers two variables:

• Total liabilities (TL) a company has.

• Equity value (EV).

Debt to Equity Ratio formula (DER) = TL / EV

## The optimal levels of the debt to equity ratio (DER)

• The ideal value of DER is considered to be 1.

• Please note that the optimal level depends from one industry to another.

• Many financial experts consider that a maximum allowable debt to equity ratio is between 1.5 and 1.9.

## Example of a calculation

Let’s assume a business with this situation:

• Total liabilities = \$100,000

• Equity value = \$110,000

The debt to equity ratio in this case is 0.91 (or 90.91%).

01 Dec, 2014