What is debt-to-equity?
In short: the debt-to-equity ratio is a company's total borrowings divided by its shareholders' equity, usually shown as a percentage. At 50%, the company has 50 cents of debt for every dollar of equity; above 100%, it owes more than its shareholders own. It measures how much the business relies on borrowed money.
How is debt-to-equity calculated?
Debt-to-equity is calculated by dividing a company's total debt — its borrowings, often including lease liabilities — by shareholders' equity, which is total assets minus total liabilities on the balance sheet. ShareSift shows the result as a percentage, so 50% means 50 cents of debt for every dollar of equity.
Debt-to-equity = total debt ÷ shareholders' equity. ShareSift shows it as a percentage.
| Company | Debt-to-equity (4 October 2026) |
|---|---|
| BHP (BHP.AX) | 50% |
| Wesfarmers (WES.AX) | 159% |
| Commonwealth Bank (CBA.AX) | not meaningful |
What does it tell you?
Debt magnifies results both ways: it lifts returns in good years and deepens losses in bad ones, and interest must be paid regardless. A rising ratio is worth understanding; a high one in a cyclical industry is a risk.
Where it misleads
- Industries differ. Utilities and property companies carry high debt routinely against stable income.
- Lease liabilities are often included in reported debt under current accounting, raising the ratio for retailers with many leased stores.
- Not for banks. Deposits and borrowings are a bank's raw material, so the ratio means something different; banks are judged on regulatory capital instead.
How ShareSift uses it
On ShareSift, a debt-to-equity below 100% earns 6 of 100 points in the ShareSift value score.
Frequently asked questions
What is a good debt-to-equity ratio?
Below 100% — owing less than shareholders own — is a common comfort level, and is the threshold ShareSift's value score uses. Stable businesses such as utilities can safely carry more, while cyclical ones like miners are safer with less. Compare a company with its own industry and check it can cover its interest.
Why is there no debt-to-equity for banks?
A bank's liabilities are mostly customer deposits and wholesale funding, which it lends out — debt is its business, not a sign of strain. The usual ratio is therefore not meaningful. Bank strength is measured by regulatory capital ratios instead, and ShareSift counts the missing figure as a failed test.
Sources
- ASIC Moneysmart, Choose your investments — the Australian regulator's guide to assessing investments.
- Company figures: Yahoo Finance via ShareSift, as of 4 October 2026. They change daily.
This information is general in nature and does not take into account your objectives, financial situation or needs. ShareSift is not a financial adviser and does not hold an Australian Financial Services Licence. Companies named are examples of how the measure works, not recommendations. Consider whether any information is appropriate for you and seek independent advice before making an investment decision.