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Debt-to-Equity Ratio Calculator
Calculate D/E ratio for any stock and compare to sector peers. Percentile benchmarks, interest coverage check, and plain-English verdict. Free.
Inputs
Interest Coverage (optional)
Results
Enter debt and equity to see D/E ratio
Load a ticker for live data, or enter values manually. Results update instantly.
How to use this D/E ratio calculator
Load a ticker or enter values manually
Type any US-listed ticker and click Load to auto-populate total debt and shareholder equity from the latest balance sheet. Or toggle to manual entry for custom analysis.
Read the D/E ratio and health indicator
Green means conservative (below 1.0×), yellow means moderate (1.0–2.0×), and red means highly leveraged (above 2.0×). The thresholds adjust for the financials sector, where high D/E is normal.
Compare to sector peers
The sector comparison bar shows where the company sits relative to the industry median. A company with D/E below the sector median is using less leverage than peers — and vice versa.
Check interest coverage
Interest coverage ratio (EBIT ÷ interest expense) tells you if the company can actually service its debt. High D/E with high interest coverage is manageable; high D/E with low coverage is dangerous.
Understanding the Debt-to-Equity Ratio
What the debt-to-equity ratio measures
The debt-to-equity ratio is one of the most fundamental measures of a company's financial health. It divides total debt by total shareholder equity to show how much of the company's financing comes from borrowing versus ownership. A D/E ratio of 1.0× means the company has equal amounts of debt and equity. Below 1.0× means more equity than debt — a conservative capital structure. Above 1.0× means the company relies more on borrowed money.
Why industry context matters
A D/E ratio that looks alarming in one industry may be perfectly normal in another. Utilities typically carry D/E ratios of 1.2–1.8× because they have predictable cash flows and regulators allow high leverage to keep consumer rates low. Technology companies often have D/E ratios below 0.5× because they generate strong cash flows without heavy capital investment.
Red flags to watch for
A D/E ratio above 2.0× for non-financial companies deserves scrutiny. When revenue drops but interest payments stay fixed, highly leveraged companies face a cash squeeze that can spiral into default. Negative shareholder equity — where total liabilities exceed total assets — is an even bigger red flag, though some mature companies like McDonald's have negative equity by design from aggressive buybacks.
D/E ratio vs. interest coverage: use both
The debt-to-equity ratio tells you how much debt a company has, but not whether it can afford it. Interest coverage ratio (EBIT ÷ interest expense) tells you if current earnings can service that debt. A company carrying 1.5× D/E with 8× interest coverage has ample room. The same 1.5× D/E with only 1.5× interest coverage is one bad quarter away from missing an interest payment.
Debt-to-Equity Ratio by Sector — Benchmarks
| Sector | Median D/E | P25–P75 Range |
|---|---|---|
| Technology | 0.35× | 0.15–0.70× |
| Healthcare | 0.45× | 0.20–0.85× |
| Consumer Discretionary | 0.80× | 0.40–1.30× |
| Consumer Staples | 0.95× | 0.55–1.50× |
| Industrials | 0.70× | 0.40–1.20× |
| Energy | 0.55× | 0.30–0.95× |
| Utilities | 1.40× | 1.10–1.85× |
| Real Estate | 1.20× | 0.85–1.80× |
| Materials | 0.60× | 0.35–1.05× |
| Communication Services | 0.90× | 0.45–1.50× |
| Financials | 1.80× | 1.20–2.60× |
Frequently asked questions
What is a good debt-to-equity ratio?
A 'good' debt-to-equity ratio depends on the industry. For most non-financial companies, a D/E ratio below 1.0 is considered conservative — it means the company has more equity than debt. A ratio between 1.0 and 2.0 is moderate. Above 2.0 suggests high leverage and elevated financial risk. Financial companies (banks, insurance) naturally operate with much higher D/E ratios (3.0–10.0×) because leverage is built into their business model.
How do you calculate debt-to-equity ratio?
Debt-to-Equity Ratio = Total Debt ÷ Total Shareholder Equity. Total debt includes both long-term and short-term interest-bearing debt from the balance sheet. Total shareholder equity is the book value of equity — total assets minus total liabilities. Both numbers come from the company's most recent balance sheet filing (10-Q or 10-K).
What does a negative debt-to-equity ratio mean?
A negative D/E ratio means the company has negative shareholder equity — its total liabilities exceed its total assets. This can happen when a company has accumulated large losses over time, or when it has taken on massive buybacks that reduced equity below zero (e.g. McDonald's, Starbucks). Negative equity is a red flag in most cases, but for some mature companies with strong cash flows, it reflects an intentional capital allocation strategy rather than financial distress.
Why do financial companies have high debt-to-equity ratios?
Banks and financial companies use leverage as a core part of their business model. A bank takes in deposits (which are liabilities) and lends them out at higher interest rates. This means high D/E ratios (often 5–10×) are normal and expected for banks. Comparing a bank's D/E ratio to a tech company's would be misleading. Instead, compare financial companies to their sector peers and focus on regulatory capital ratios (Tier 1, CET1) which are specifically designed to measure bank safety.
What is a good debt-to-equity ratio by industry?
A 'good' D/E ratio depends entirely on the industry because capital intensity varies wildly. Technology is asset-light and runs a median D/E of 0.35× (typical range 0.15–0.70×). Healthcare is similar at 0.45× (0.20–0.85×). Capital-heavy industries carry far more leverage: Utilities run a median 1.40× (1.10–1.85×) and Financials sit at 1.80× median (1.20–2.60×). Always compare within the same sector.
What is the interest coverage ratio and why does it matter?
Interest coverage ratio = EBIT ÷ Interest Expense. It measures how many times a company can pay its annual interest charges from operating earnings. A ratio above 3× is generally comfortable. Between 1.5× and 3× warrants caution. Below 1.5× means the company is struggling to cover its interest payments, which increases the risk of default. Interest coverage is the best companion metric to D/E because it shows whether the company can actually service the debt it carries.
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