Debt-to-equity ratio On a balance sheet, the formal definition is that debt (liabilities) plus equity equals assets, or any equivalent reformulation. Both the formulas below are therefore identical: Debt to equity can also be reformulated in terms of assets or debt: General Electric Co. () Debt-to-equity ratio The debt-to-equity ratio (D/E) is a financial ratio indicating the relative proportion of shareholders' equity and debt used to finance a company's assets. Closely related to leveraging, the ratio is also known as risk, gearing or leverage. The two components are often taken from the firm's balance sheet or statement of financial position (so-called book
Corporate finance profitability / return on capital (of which cash flow is probably the most important). Guided by the above criteria, management will use a combination of policies and techniques for the management of working capital. These policies aim at managing the "current assets" (generally cash and cash equivalents, inventories and debtors) and the short term financing, such that cash flows and returns are acceptable. Use of the term "corporate finance" varies considerably across the world. In the United States it is used, as above, to describe activities, analytical methods and techniques that deal with many aspects of a company's finances and