A “good” debt-to-equity ratio is a measure of a company’s financial leverage, calculated by dividing its total debt by its total equity. It indicates how much debt a company is using to finance its operations relative to the amount of equity it has. A good debt-to-equity ratio is generally considered to be below 1.0, which means that the company has more equity than debt. However, the ideal debt-to-equity ratio can vary depending on the industry and company.
Having a good debt-to-equity ratio is important because it can help a company to: