debt to equity ratio

A debt to equity ratio (sometimes referred to as "leverage ratio") is a way to measure how much debt a company has compared to how much it owns. Debt is what a company owes to other people or businesses, like when you borrow money from a bank or a family member. Equity is what the company owns, like when you own a house or car.

So if a company has a lot of debt, then it has borrowed more money than it owns. A high debt to equity ratio means the company has more debt than equity. A low ratio means the company has more equity than debt.