calculate_debt_to_equity
Calculate the debt-to-equity ratio: total debt divided by shareholders’ equity — how much a company relies on debt versus equity financing. Formula: Debt-to-Equity = Total Debt / Shareholders’ Equity. WHEN TO USE: Use to evaluate capital structure and financial risk, compare leverage across peers, or assess covenant headroom. WHEN NOT TO USE: Do NOT compare D/E across industries without context — capital intensity varies widely; a negative ratio (negative equity) indicates distress, not low leverage. BEHAVIOUR: pure deterministic calculation — no side effects, no network or storage access; idempotent and non-destructive; identical inputs always produce identical outputs. Division by zero or non-finite inputs returns an explicit error instead of a number. RETURNS: JSON object { debt_to_equity: number (e.g. 1.5 = 1.5x), inputs }. PARAMETERS: total_debt (required): Total debt (short-term + long-term interest-bearing), e.g. 300000. Must be >= 0. shareholders_equity (required): Total shareholders’ equity, e.g. 200000. May be negative in distress (result will be negative).
Input Schema
| Name | Required | Description | Default |
|---|---|---|---|
| total_debt | Yes | Total debt (short-term + long-term interest-bearing), e.g. 300000. Must be >= 0. | |
| shareholders_equity | Yes | Total shareholders’ equity, e.g. 200000. May be negative in distress (result will be negative). |