⚖️ Leverage & Solvency Ratios Calculator
Enter total debt, equity and assets to get the debt-to-equity, debt, equity-multiplier and debt-to-capital ratios, each explained in terms of financial risk.
$2 of debt for every $1 of equity. A moderate reliance on debt, common, but check it against industry norms. Capital-intensive industries (utilities, banks) run much higher, so compare to peers.
Assets are 3× equity, every $1 of equity supports $3 of assets. Higher means more of the balance sheet is funded by debt (more leverage).
66.7% of assets are financed by debt. A high share of assets funded by debt, more vulnerable to rising rates or a downturn.
Debt makes up 66.7% of total capital (debt + equity). The company leans on debt for the majority of its capital.
Leverage (solvency) ratios show how much a company relies on debt versus owners’ money. Whether a level is risky depends heavily on the sector, utilities, telecom and banks run structurally high leverage, so compare to industry peers. Note: some sources use total liabilities for debt-to-equity, others only interest-bearing debt; enter whichever you mean. Educational information, not financial advice. 🔒 In your browser.
How the leverage & solvency ratios calculator works
Leverage (solvency) ratios show how much a company relies on borrowed money versus owners' capital, and how much risk that carries. From total debt, equity and assets the tool computes debt-to-equity (debt ÷ equity), the debt ratio (debt ÷ assets), the equity multiplier (assets ÷ equity) and debt-to-capital (debt ÷ (debt + equity)), and interprets each.
Leverage is one of the most industry-dependent measures: utilities, telecoms and banks carry structurally high debt against stable cash flows, while tech and healthcare run low. So a debt-to-equity of 2 may be prudent in one sector and alarming in another, always compare to peers. Also note whether "debt" means total liabilities or only interest-bearing debt, as sources differ. Educational information, not financial advice.
Frequently asked questions
What is a good debt-to-equity ratio?
A common rule of thumb is 1 to 2 for many industries, with below 1 seen as conservative and above 2 as higher-risk. But it's strongly industry-dependent, capital-intensive sectors run much higher, so compare to peers rather than an absolute cutoff.
What does the debt ratio tell me?
What fraction of a company's assets are financed by debt (debt ÷ assets). Below about 0.5 is generally viewed as conservative; approaching 1 means the firm is heavily financed by debt and more exposed to rising rates or a downturn.
What is the equity multiplier?
Total assets ÷ shareholders' equity, a leverage gauge showing how many dollars of assets each dollar of equity supports. A multiplier of 2 means assets are twice equity (the rest funded by debt); higher means more leverage.
What is the difference between debt-to-equity and debt-to-capital?
Both measure leverage. Debt-to-equity compares debt to equity; debt-to-capital compares debt to total capital (debt + equity), so it's always between 0 and 1 and shows debt's share of the whole funding mix.
Is high leverage always bad?
No. Debt is cheaper than equity and can boost returns, and stable-cash-flow businesses safely carry a lot. It becomes dangerous when earnings can't reliably cover the interest, which is what the coverage ratios test. Educational information, not advice.
Educational information, not financial advice. These calculators use standard formulas with the figures you enter; results are illustrations, not guarantees. For decisions about your money, consult a qualified, regulated financial professional.