Plain-language questions
Ask for debt-to-equity ratio per month, customer or product in the SQL Explorer with AI. The AI writes the SQL, you see the query and run it yourself; the AI only receives metadata.
KPI · Finance
Debt-to-equity ratio: formula and example.
The debt-to-equity ratio is total liabilities divided by equity. It shows how many euros of debt there are for each euro of equity, and so how heavily the business is financed with borrowed money. The higher the ratio, the greater the financial leverage and the risk when results disappoint.
Debt-to-equity ratio formula
(Current liabilities + long-term liabilities) ÷ equity
Worked example
At the end of 2025 Acme Groothandel had €2,200,000 of current liabilities and €800,000 of long-term liabilities, €3,000,000 in total. Equity was €2,000,000. The debt-to-equity ratio is €3,000,000 ÷ €2,000,000 = 1.5.
Fictitious figures for Acme Groothandel, a sample wholesaler.
How to read this KPI
A ratio above 1 means there is more debt than equity in the business. More debt can lift return on equity as long as profit exceeds the interest cost, but it raises the risk when results fall short. Compare the ratio with previous years, with lender covenants and with businesses in the same sector.
Pitfalls with debt-to-equity ratio
- Not stating whether all liabilities count or only interest-bearing debt; lenders often use the latter.
- A negative or very small equity figure produces a ratio that can no longer be read meaningfully.
- Counting lease obligations as debt in some years or companies and not in others, depending on the accounting rules.
SQL & DAX
Calculating debt-to-equity ratio in SQL and DAX
Two examples on a fictitious data warehouse for Acme Groothandel: a PostgreSQL query and a measure for a Power BI model. Adjust table and column names to your own model.
WITH bal AS (
SELECT account_group, SUM(amount) AS balance
FROM gl_entries
WHERE entry_date <= current_date
AND account_group IN ('current_liabilities', 'long_term_liabilities', 'equity')
GROUP BY account_group
)
SELECT SUM(balance) FILTER (WHERE account_group <> 'equity') AS total_liabilities,
SUM(balance) FILTER (WHERE account_group = 'equity') AS equity,
ROUND(SUM(balance) FILTER (WHERE account_group <> 'equity')
/ NULLIF(SUM(balance) FILTER (WHERE account_group = 'equity'), 0), 2) AS debt_to_equity
FROM bal;Balance = CALCULATE(SUM(GL[Amount]), FILTER(ALL('Date'), 'Date'[Date] <= MAX('Date'[Date])))
Debt to Equity =
DIVIDE(
CALCULATE([Balance], GL[AccountGroup] IN {"current_liabilities", "long_term_liabilities"}),
CALCULATE([Balance], GL[AccountGroup] = "equity")
)In ENABLE
Tracking this KPI in ENABLE
In your Power BI dashboard
Define the KPI as a measure in your Power BI model and show it in the portal, with "Last refreshed" next to it. Access profiles and optional row-level security decide who sees which figures.
Custom dashboards (pilot)
Add the KPI as a tile to a custom dashboard, compared with last year. The Dashboard Builder is a pilot and can be switched on per client.
Monthly targets
With the built-in Targets app you set a target for the KPI per month, so you see actuals and target side by side.
FAQ
Frequently asked questions
How do you calculate the debt-to-equity ratio?
Divide total liabilities, short and long term, by equity. With €3,000,000 of liabilities and €2,000,000 of equity, the ratio is 1.5. Some analysts include only interest-bearing debt, so state which version you use.
What is the difference between debt-to-equity and the solvency ratio?
The debt-to-equity ratio divides liabilities by equity, the solvency ratio divides equity by total assets. You can convert one into the other: a ratio of 1.5 corresponds to a solvency ratio of 1 ÷ (1 + 1.5) = 40%.
What does a debt-to-equity ratio of 2 mean?
A ratio of 2 means there are two euros of debt for every euro of equity. Two thirds of the business is then financed with borrowed money. Whether that is sensible depends on how stable the cash flows are and how high the interest burden is.
Further reading
- KPI libraryFinancial KPIs: formulas and examplesFinancial KPIs show how profitable, liquid and solvent an organisation is. The data usually comes from your accounting package or ERP: general ledger entries, invoices and open items.Read more
- ResourcesHow to build a KPI dashboard: steps and examplesA KPI dashboard is an overview of the key figures you use to steer towards your goals, such as revenue, margin, on-time delivery or absenteeism. A good KPI dashboard does not start with the software, but with the decisions it needs to support. You then choose a limited number of KPIs, define them, sketch the dashboard and only then build it.Read more
- SolutionPower BI dashboard portal: share dashboards securelyShare your Power BI dashboards securely in your own portal, with role-based access.Read more
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