The Debt Equity Ratio is an important metric used by businesses to evaluate their overall financial health. Put simply, it’s a comparison of the company’s total liabilities to its total assets — those being any debt and equity, respectively. A higher ratio suggests that the business has more liabilities, while a lower ratio implies the opposite. By evaluating this metric, businesses can obtain valuable insights into whether they are taking on too much debt relative to their asset base, or vice versa. This ratio is also an important tool for investors as it can provide a quick and easy evaluation of a business’s risk profile.