Background
On a balance sheet, the formal definition is that debt (liabilities) plus equity equals assets, or any equivalent reformulation. Both the formulas below are therefore identical:
- A = D + E
- E = A – D or D = A – E.
Debt to equity can also be reformulated in terms of assets or debt:
- D/E = D /(A – D) = (A – E) / E.
Read more about this topic: Debt-to-equity Ratio
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