The amount of money owed as compared to the amount of assets owned. For example, a debt of $100 combined with total assets (cash-value assets owned free and clear) of $100 produces a debt-equity ratio of 50/50. A 50/50 ratio is fairly typical for established businesses. Start-ups and businesses undergoing restructuring may have ratios as high as 90/10. These ratios are used by lenders in the process of determining debt worthiness, and are studied by investors seeking to judge the investment value of a company or venture.

Debt-equity ratio is only of real interest when it is compared with other financial figures related to a company. Numerous other factors need to be considered, ranging from revenues and growth rate to customer turnover rates and the perceived market value of the company's products or services.

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