Is it good to have a high or low debt to equity ratio?
Generally, a company wants to have as low of a debt to equity ratio as possible. However, there is also an argument that a company should have a healthy amount of debt because it gives the company capital to grow without having to sacrifice equity.
The visual below illustrates how changes in debt and equity impact the ratio. There is no ideal debt to equity ratio – it will depend on the industry and the company’s operating strategy!
Back To All Questions