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How to calculate the debt to equity ratio?

The debt-to-equity ratio is indicative of the degree of financial leverage used. It essentially is used to determine how much debt has been used to finance its assets value relative to the value of shareholders’ equity.

The debt-to-equity ratio is used to indicate the degree of protection to creditors in the case of insolvency.

For example, if Sweetwater ventures has debt of $200 and total equity of $400, then they would have a debt to equity ratio of 0.5!


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