Startup Terms Glossary
What is a Debt-to-Equity Ratio?
Debt-to-equity ratios measure the amount of debt and equity a startup has to finance its business. You have to determine your debt-to-equity ratio by dividing your total long-term debt, such as real estate loans, and dividing them by your shareholder’s equity. If your startup’s debt-to-equity ratio is less than one, then investors may view your company as a less risky investment than compared to firms with a higher number.
Debt to Equity Ratio Examples
Examples of long-term debts considered in debt-to-equity ratios include:
- Example 1. Mortgages
- Example 2. Notes payable
- Example 3. Convertible bonds
- Example 4. Bonds
- Example 5. Lease obligations
Here’s a page about debt-to-equity ratios.
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