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Definition

Debt-to-Equity Ratio

How much a company relies on borrowing versus owners’ capital.

The debt-to-equity ratio compares a company’s total debt to its shareholders’ equity, showing how heavily the business is financed by borrowing. Lower ratios generally mean a sturdier balance sheet that can withstand downturns and rising interest rates, though what counts as “safe” varies by industry — utilities carry more debt than software firms. Market Lens weighs debt-to-equity in its Fortress Balance Sheet score.

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