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MARKETS / GLOSSARY / NET DEBT TO EQUITY

Net debt to equity

Net debt to equity is how much the company owes, net of the cash it holds, against what the owners have in it — the standard measure of financial leverage.

Definition

How it is computed here

Formula(total debt − cash) ÷ shareholders' equity
UnitMultiple (×)
PeriodOne fiscal year, as reported
SourceExtracted from SEC filings; every value on an asset page carries the accounting tag and the filing it came from
Identifierdivida_liquida_patrimonio
The inputs

What goes into the formula

Net debtShort-term and long-term borrowings less cash and equivalents.
Shareholders' equityTotal assets less total liabilities. Where equity is zero or negative the ratio is not published: a negative denominator turns a heavily indebted company into a comfortable-looking negative number, which is worse than silence.

A formula without its inputs explained is decoration. Where an input is missing from a filing, the metric is left empty here rather than completed with a zero or an estimate.

Worked example

How to calculate net debt to equity, step by step

The same borrowings against two different equity bases.

Both — net debt$3,800M
Company A — equity$7,600M
Company B — equity$1,000M
  1. A: 3,800 ÷ 7,600 = 0.50×.
  2. B: 3,800 ÷ 1,000 = 3.80×.
  3. For every dollar the owners have in it, A owes fifty cents and B owes three dollars eighty.

Result: 0.50× against 3.80× on identical debt

The debt did not change. What changed is how much of the company the owners actually funded, and that is what decides who absorbs a bad year first.

The figures in this example are illustrative and rounded — they are not a real company. The real figures on this site are the live ones below and on every asset page, each carrying the filing it came from.

Why it matters

What net debt to equity is good for

Leverage is the variable that turns a difficult year into a fatal one. Two companies with the same operations and different leverage have different risk, and this is the ratio that says by how much. It is also the reason a high return on equity has to be read carefully — leverage raises both.

The limit

What this number does not tell you

A negative figure means the company holds more cash than debt, which is a position and not an error. And where equity is small or negative the ratio explodes or inverts without the debt having changed — the denominator is doing the work, not the borrower, which is why this site refuses to print it rather than publishing a well-formed lie. The ratio is also not comparable across industries: a utility at 1.5× may be conservative and a software company at 1.5× unusual. The refusal is not rare. Of the 3,039 companies here with both a net debt figure and an equity balance in their most recent year, 403 — one in seven — have no ratio printed, because equity is zero or negative and the site declines to publish a number that would be arithmetically valid and financially meaningless. An empty cell here means the denominator failed, not the data.

Every metric on this site is published with its blind spot stated. A figure without its limit is half a fact.

In the data

Highest reported net debt to equity

From the most recent fiscal year of each company.

On a real company

See it in a published filing

Their sectors

These pages show the figure across up to nineteen fiscal years, with the accounting tag and the filing behind every value.

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