Debt/Equity Ratio Term category: Finance/Accounting In 10 words or less: A ratio that helps investors determine the debt load of a company.
Definition: This is the ratio of the company's liabilities to its equity (total value of all the stock).
StockJargon Advice: The debt-equity ratio is an important number to consider. A company with a high debt-equity ratio is one that has a considerable amount of debt.
Debt in itself isn't bad. However, debt requires that the company make timely interest payments. That means it's important that companies with high debt-equity's have positive earnings and strong cash flows. Otherwise, it means they might default on paying their debt.
Corporate Earnings Learn how companies report their earnings and how to use this information to decide what stocks to invest in.