Compares what you owe (liabilities) to what you own (equity). A low debt-to-equity ratio means you own more than you owe—a sign of Solvency. A high ratio suggests liabilities exceed assets, a path toward Insolvency. Many investors keep this ratio near 30% or less so borrowed money enhances returns without overwhelming their balance sheet. For step-by-step examples, see Debt-to-equity Ratio Explained.