A company's debt-to-equity ratio is a measure of its financial leverage. A high number indicates that the business has been borrowing money to finance operations, and this can be risky if they're not able to generate enough reliable profits from their investment because there will never be any room left over for paying off loans or debts in time without taking too much risk with other ventures. The formula is: Debt-to-equity ratio = Total liabilities / Total shareholders’ equity