Which financial ratio measures a firm’s total debt capital relative to its total shareholders’ equity?

Explanation

• Debt-to-Equity Ratio formula: $text{Debt-to-Equity} = frac{text{Total Debt (Liabilities)}}{text{Total Shareholders’ Equity}}$.
• It measures financial leverage and long-term solvency risk.
• High debt-to-equity ratios indicate high leverage, increasing financial risk and potential default vulnerability.