The debt-to-equity ratio (D/E) is a financial ratio indicating the relative proportion of shareholders' equity and debt used to finance a company's assets It is closely related to leveraging (due to the fact that it leads to more risk), the ratio is also known as Risk, Gearing or Leverage. The two components are often taken from the balance sheet or statement of
financial position (so-called book value), but the ratio may also be calculated using market values for both, if the company's debt and equity are publicly traded, or using a combination of book value for debt and market value for equity financially. Generally, the lower the ratio, the healthier the balance sheet of the company.
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