debt-to-equity ratio – n : finance term, sometimes referred to by shorthand D/E; the ratio of debt to shareholders’ equity on a company’s balance sheet. D/E is calculated by dividing the sum of the debt on a company’s balance sheet (bank loans, notes, etc.) by the sum of the shareholders’ equity. The debt-to-equity ratio is a commonly-used measure of the strength of the capital structure of a business – answering the important question, “How strong is the company’s balance sheet?”. Companies with low D/E ratios tend to be considered better credit risks than companies with high D/E ratios.

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Adapted from "The CompanyCrafters Entrepreneur's Dictionary"
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