LT D/E — Long-Term Debt to Equity
DeepScreen explains LT D/E as follows: Long-term debt to equity isolates structural borrowing and helps show how much enduring leverage supports the business.
Formula
Long-term debt ÷ shareholder equity
Illustrative example
Long-term debt of 40 million divided by equity of 100 million gives 0.4x. Short-term borrowing remains outside this calculation.
Educational example; these are not reported company figures.
How to interpret it
- A declining ratio can indicate balance-sheet repair.
- Stable cash-generating businesses can support more debt.
Limitations
- It excludes short-term obligations.
- Maturity schedules and interest rates still matter.
Frequently asked questions
- What is LT D/E?
- Long-term debt to equity isolates structural borrowing and helps show how much enduring leverage supports the business.
- How is LT D/E calculated?
- Long-term debt ÷ shareholder equity
- What should investors watch for with LT D/E?
- It excludes short-term obligations. Maturity schedules and interest rates still matter.
. Educational analytical content, not investment advice.