Debt to Equity Ratio

Debt to Equity Ratio is another name for Debt Equity Ratio, showing the proportion of debt used relative to shareholders' funds.

Debt to Equity Ratio and Debt Equity Ratio refer to the same metric and are used interchangeably in financial statements and IPO prospectuses.

It is calculated as:

Debt to Equity Ratio = Total Debt / Total Equity

Investors use this ratio to:

Assess how leveraged a company is before its IPO

Compare financial risk across companies in the same sector

Understand how much cushion equity provides against debt obligations

Example:

A company with ₹30 crore debt and ₹60 crore equity has a debt to equity ratio of 0.5, indicating moderate leverage.