D

Glossary · PSX term

Debt-to-equity ratio.

Debt-to-equity ratio compares a company's borrowings with shareholder equity. It helps investors understand leverage and balance-sheet risk.

Definition

The ratio is commonly calculated as total debt divided by shareholder equity. High leverage can amplify returns when conditions are good and increase risk when rates, margins, or cash flows weaken.

Worked example

If total debt is Rs. 30 billion and shareholder equity is Rs. 20 billion, debt to equity is 150%.

Related on PSX Clarity

Return on equity

Enterprise value

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