Debt to Equity Ratio
Calculate the debt to equity ratio, a solvency ratio that measures the proportion of a company’s equity that is financed by debt. This ratio is also known as the Gearing Ratio.
The debt to equity ratio, for short the D/E ratio, indicates the relative contribution of debt and equity to a company’s capital structure. It helps assess the level of financial risk a company carries due to its debt obligations. A higher ratio implies a higher reliance on debt to finance the business, which could increase risk but also potentially lead to higher returns for shareholders.
The formula is as follows:
\[\text{Debt to Equity Ratio} = \text{Total Debt} / \text{Total Equity}\]Also known as: D/E ratio, leverage ratio, gearing ratio.
Debt to Equity Ratio in Python
get_debt_to_equity_ratio is part of the Ratios module of the open-source Finance Toolkit. Install it with:
pip install financetoolkit -U
Then call get_debt_to_equity_ratio as shown below.
from financetoolkit import Toolkit
toolkit = Toolkit(["AAPL", "TSLA"], api_key="FINANCIAL_MODELING_PREP_KEY")
debt_to_equity_ratios = toolkit.ratios.get_debt_to_equity_ratio()
Which returns:
| 2021 | 2022 | 2023 | 2024 | 2025 | |
|---|---|---|---|---|---|
| AAPL | 2.1639 | 2.6145 | 1.9942 | 2.0906 | 1.5241 |
| TSLA | 0.2809 | 0.1252 | 0.1505 | 0.1849 | 0.1011 |
Parameters
get_debt_to_equity_ratio accepts the following parameters:
- rounding (int, optional): The number of decimals to round the results to. Defaults to 4.
- growth (bool, optional): Whether to calculate the growth of the ratios. Defaults to False.
- lag (int | str, optional): The lag to use for the growth calculation. Defaults to 1.
- standardize (bool, optional): Whether to standardize (Z-Score) the result. When combined with growth=True, standardizes the growth values instead of the raw values. Defaults to False.
- trailing (int): Defines whether to select a trailing period. E.g. when selecting 4 with quarterly data, the TTM is calculated.