ECONOMICS

Detailed explanation-1: -The debt-to-equity ratio tells a company the amount of risk associated with the way its capital structure is set up and run. The ratio highlights the amount of debt a company is using to run their business and the financial leverage that is available to a company.

Detailed explanation-2: -A D/E ratio of 2 indicates that the company derives two-thirds of its capital financing from debt and one-third from shareholder equity, so it borrows twice as much funding as it owns (2 debt units for every 1 equity unit).

Detailed explanation-3: -The Formula for Debt-To-Capital Ratio The debt-to-capital ratio is calculated by dividing a company’s total debt by its total capital, which is total debt plus total shareholders’ equity.

Detailed explanation-4: -Debt to Equity Ratio = Total Liabilities / Shareholders Equity.