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Debt Equity Ratio Calculator

Work out debt equity ratio instantly with clear inputs, formula shown and shareable results.

About Debt Equity Ratio Calculator

Debt to equity compares borrowed capital with owners' capital. Netting off cash gives the ratio lenders actually focus on, and gearing restates the same information as debt's share of total capital, which is the form most covenants use.

Formulas

Debt to equity

D/E = Total debt / Shareholders' equity

Gearing

Gearing % = Debt / (Debt + Equity) x 100

Worked example

With the default values below, Debt Equity Ratio Calculator returns Debt to equity ratio of 0.750. Change any input above and every figure here is recalculated in your browser.

Inputs used

Total debt
4,500,000
Shareholders' equity
6,000,000
Cash and equivalents
900,000

Results

Debt to equity ratio
0.750
Net debt to equity ratio
0.600
Gearing (debt / capital employed)
42.86%
Assessment
Moderate

Step by step

  1. 1Values used
  2. 2Debt to equity
  3. 3Gearing
  4. 4Debt to equity ratio= 0.750
  5. 5Net debt to equity ratio= 0.600
  6. 6Gearing (debt / capital employed)= 42.86
  7. 7Assessment= Moderate

Assumptions and limits

  • The result is derived only from the 3 inputs listed above. Anything not among them is not part of the calculation.
  • In particular, this calculator does not take inflation, tax, fees or charges or compounding frequency into account.
  • Figures are rounded for display to 3 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.
  • This is an estimate for general information and not professional financial, tax or legal advice. See the full disclaimer for the limits that apply to this kind of calculator.

How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.

Frequently Asked Questions

What ratio is acceptable?

It is entirely sector-dependent: utilities and property routinely run above 2.0 on stable cash flows, while software companies often sit near zero.

Should leases be included in debt?

Yes under IFRS 16 — lease liabilities are debt. Excluding them understates leverage for any retailer or logistics business.

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