Calculate D/E ratio, debt ratio, interest coverage, and other leverage metrics with industry benchmark comparison.
Enter total liabilities, shareholders' equity, total assets, and operating earnings, and this tool returns the debt-to-equity ratio, the debt ratio, and the interest coverage ratio, then positions each result against an industry benchmark band. The most common mistake is reading any D/E above 1.0 as dangerous: a 1.5 is routine in capital-intensive industries such as utilities and real estate, yet concerning in software, so the benchmark matters more than the raw number. Note that the ratio uses total liabilities, not interest-bearing debt, which inflates the figure for companies with large payables or leases.
A concrete input and expected output from the current implementation.
Input
Total liabilities: 450,000 | Shareholders' equity: 300,000 | Total assets: 750,000 | EBIT: 120,000 | Interest expense: 30,000
Expected output
Debt-to-equity ratio: 1.5 | Debt ratio: 0.60 | Interest coverage: 4.0
Total liabilities of 450,000 divided by equity of 300,000 gives 1.5; the same liabilities divided by assets of 750,000 gives 0.60; and EBIT of 120,000 divided by interest of 30,000 gives 4.0, meaning operating earnings cover interest four times over.
The debt-to-equity ratio divides total liabilities by shareholders' equity. The debt ratio divides total liabilities by total assets. Interest coverage divides earnings before interest and taxes by interest expense. Because the inputs overlap, one set of balance sheet and income statement figures yields all three, shown as numbers and as percentages where appropriate.
Each computed ratio is placed against a typical range for the industry you select, showing whether the company sits above, within, or below the band. This context is what makes the tool useful: the same D/E of 1.5 that alarms a lender in one sector is ordinary in another, so the verdict to read is the comparison, not the ratio itself.
No single number is universally good. Capital-intensive industries routinely run above 1.5, while asset-light businesses often operate below 0.5, so the tool's industry band is the reference to use. More important than the level is the direction: a steadily rising D/E with shrinking interest coverage is a warning regardless of where the ratio starts.
Not necessarily. A negative D/E appears when shareholders' equity is negative, which happens when cumulative losses or buybacks have erased retained earnings. The company may still be solvent if it can pay its obligations from operations, but the negative sign means book equity is exhausted, so the balance sheet deserves a closer look rather than a judgment based on the ratio alone.
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