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Debt-to-equity

A higher debt-to-equity ratio means more of the company's financing comes from creditors rather than shareholders, which amplifies both gains and losses and adds fixed interest obligations that must be paid regardless of how the business is performing. What counts as "high" varies enormously by industry — capital-intensive businesses like utilities typically run higher ratios than software companies as a matter of course.

Debt-to-equity = Total debt / Shareholders' equity

This explains what debt-to-equity measures. It isn't investment advice — see the disclaimer.