Definition
Debt-equity ratio is the financial ratio comparing a company's total debt to its shareholders' equity. It shows up in the paperwork: ownership, rights, and what happens when things change. Name it clearly, then let the next decision — a hire, a price, a test, or a pass — follow from that meaning.
In the room
How the word shows up in a real conversation.
Two cofounders disagree until they define Debt-equity ratio. Once they agree it means “Financial ratio comparing a company's total debt to its shareholders' equity”, the argument becomes a decision.
Common mistake
Using Debt-equity ratio as a label instead of a fact. If you cannot point to the evidence — a number, a customer, or a written assumption — you are using the word as jargon.
See also
Debt
Money borrowed by a company or individual that must be repaid with interest.
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Debt financing
Raising capital by borrowing money that must be repaid over time.
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Debt service
Regular payments required to cover interest and principal on outstanding debt.
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Debt-service coverage ratio
Measure of a company's ability to pay its debt obligations from operating income.
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