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Total Debt-to-Equity is a Leverage Ratio that uses inputs only from the Liability side of the Balance Sheet. Calculates the level of Shareholder resources used in financing the Balance Sheet.

A Financial Ratio such as the Total Debt-to-Equity Ratio is a Leverage Ratio, thus a Risk Ratio. The Ratio measures the level of Gearing a Company is using to finance the Company’s Total Assets. Thus, how a Company’s capital structure is tilted either towards either Debt or Equity and is calculated by the following formular.

Total Debt-to-Equity Ratio = [(Total Debt + Fixed Payment Liabilities) / Shareholders’ Equity]

A Company’s reliance on Debt Financing will fluctuate over time, as will, the changing reliance between Short-Term and Long-Term Debt and Payments. Further, the level of Gearing employed will vary between Companies which are competitors in the same Sector.


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Warren William

Meet the author behind Smartest-Data. Warren William has a career in Finance and Investments extending over 35 years, both on the Buy Side and Sell Side. His most recent roles include, developing Institutional Risk Management Programs for managing Equity and Fixed Income Risk.  Prior to this Warren William work in Alternative Investments, in Investment Management and as a Buy Side Equity Analyst. Warren William brings a wealth of knowledge and expertise to the table, providing in-depth analysis and commentary on the latest trends in the Stock Markets. Contact information: or Telegram +393339034488

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