Equity · Core
Debt-to-Equity Ratio
Debt-to-equity is interest-bearing debt divided by book (or market) equity — a headline leverage ratio that hides maturity and covenants.
Definition
D/E = debt / equity. Book D/E uses accounting equity; market D/E uses market cap. What counts as debt (leases, pensions, preferred) changes the number. It is not duration-aware and not a coverage ratio.
Why it matters
Covenants, rating agencies, and factor screens all bucket names on leverage. Mis-classifying leases or hybrids moves the bucket.
Case
IFRS 16 put leases on the sheet and jumped D/E for airlines overnight. The planes did not change; the ratio did.
How to read it
State book vs market and the debt definition. Then look at net debt/EBITDA and interest cover — D/E alone is a silhouette.
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