---
title: Debt Ratio simply explained
description: Calculate Debt Ratio ✓ English ✓ Example ✓ Score ✓ Debt Ratio ✓ Definition ✓ Screener ⇒ Read now!
---

[Stock blog with free stock analyses of top scorer stocks](https://blog.stocksguide.com)

# [Debt Ratio simply explained](https://blog.stocksguide.com/knowledge/debt-ratio-simply-explained)

 Written by [Oscar Leistikow](https://blog.stocksguide.com/author/oscar-leistikow) | Jun 13, 2022

Table of contents

1. [What is the debt ratio?](https://blog.stocksguide.com/knowledge/debt-ratio-simply-explained?hs_amp=true#What-is-the-debt-ratio)
2. [How is the debt ratio calculated?](https://blog.stocksguide.com/knowledge/debt-ratio-simply-explained?hs_amp=true#How-is-the-debt-ratio-calculated)
3. [What does the debt ratio mean?](https://blog.stocksguide.com/knowledge/debt-ratio-simply-explained?hs_amp=true#What-does-the-debt-ratio-mean)

## **What is the debt ratio?**

The debt ratio indicates how highly indebted a company is. There are companies with low levels of debt that have a high level of cash and can easily pay off their debts. In contrast, there are also companies that can barely manage their high debts.

## **How is the debt ratio calculated?**

In stocks.guide, debt is calculated as follows according to the High Growth Investing strategy:

**Debt-equity ratio = debt / equity**

The sum of current and non-current liabilities is set in relation to equity. The most recent quarterly figures are used for the calculation.

## **What does the debt ratio mean?**

A debt ratio of less than 1 indicates a low level of debt. A debt ratio greater than 2 indicates possible risks from debt. Companies with a low debt ratio tend to be less risky. However, the debt ratio can be subject to high fluctuations.

[View full post](https://blog.stocksguide.com/knowledge/debt-ratio-simply-explained)

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