Independent finance learning
Debt-to-Equity Calculator
Calculate interest-bearing debt relative to book equity and understand the definition and limits of the ratio.
Try the numbers
Formula and inputs
Debt-to-equity = interest-bearing debt ÷ book shareholders’ equity
This tool uses interest-bearing debt, not total liabilities. Other presentations use total liabilities; do not compare the two definitions as if they were identical.
Worked example
£250,000 of debt divided by £500,000 of book equity gives 0.50×.
Assumptions and limitations
Positive book equity is required. A ratio based on zero or negative equity is not a useful conventional comparison. This does not measure the market value of equity or show when debt payments fall due.
Understand the result
Enterprise value vs equity value: the difference explainedSources and further reading
Sources checked 4 October 2026. Worked examples are fictional HC teaching illustrations.