An accomplished financial services professional, Mark Izydore has co-managed CJ Consultants in the Palm Beach-area town of Jupiter, Florida, since 2020. While serving as an accountant with Arthur Andersen earlier in his career, Mark Izydore won a company award for a presentation on debt-to-equity.

A key barometer of overall financial health in the world of corporate finance, the debt-to-equity (D/E) ratio measures the total debt liabilities of a given company against its wholly owned shareholder equity. This shareholder equity includes both original capital investment funds and any earnings that this capital has accrued over time.

The D/E ratio is particularly useful when it comes to assessing a company’s capacity to cover outstanding debts when confronted with a slump in business. Acceptable D/E ratios vary considerably by industry and market sector, but a D/E ratio of roughly 2 to 2.5 is typically considered satisfactory. Conversely, a D/E ratio that ranges from 5 to 7 is likely to raise red flags among banks and other lending organizations.