Debt/equity ratio

Definition:

Indicator of financial leverage. Compares assets provided by creditors to assets provided by shareholders. Determined by dividing long-term debt by common stockholder equity.

Investing Essentials


Copyright © 2011 Campbell R. Harvey, Professor of Finance, Fuqua School of Business at Duke University

Term of the Day

Shakeout

A dramatic change in market conditions that forces speculators to sell their positions, often at a loss.

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