Learn the stock market › Key ratios › Lesson 6 of 7

What is the debt-to-equity ratio?

Short answerThe debt-to-equity ratio shows how large a company's loans are compared with its owners' money. The formula is total debt divided by equity. The middle of the largest companies is 0.39 right now, or $0.39 of debt for each dollar of equity. Net debt to EBITDA instead shows how many years of earnings the loans equal.

How it is calculated

Both numbers start from the loans. Oracle, the year that ended in May 2026:

Debt: $156 billion
Equity: $42.5 billion
Debt to equity: $156 billion / $42.5 billion = 3.67

Net debt is debt minus cash, because cash could pay part of the loans. EBITDA is earnings before interest, taxes, depreciation and amortization.

Cash: $31.3 billion
Net debt: $125 billion
EBITDA: $33.4 billion
Net debt to EBITDA: $125 billion / $33.4 billion = 3.73

So the net debt equals 3.73 years of EBITDA. This is a comparison and not a plan, because other things cost money too.

Debt at the largest companies

Company	Debt / equity	Net debt / EBITDA
Palantir	0.03	−0.83
AMD	0.06	−0.23
Nvidia	0.07	0.00
Microsoft	0.13	0.17
Alphabet	0.14	0.16
Tesla	0.18	−0.15
Costco	0.24	−0.77
Amazon	0.37	0.40
Meta	0.39	0.45
Netflix	0.54	0.18
Visa	0.66	0.31
Walmart	0.67	1.21
Apple	0.71	0.26
Broadcom	0.80	1.41
Eli Lilly	1.60	1.11
Mastercard	2.46	0.41
Oracle	3.67	3.73

The latest fiscal year. For 12 of 20 companies it ended in December 2025. A minus means the cash is larger than the debt.

The middle is 0.39 for debt to equity and 0.26 for net debt to EBITDA.

Banks and holding companies are left out: Berkshire Hathaway and JPMorgan Chase. A bank's debt is part of the business itself, and they have no EBITDA to compare with.

Missing line. The debt line is missing for Exxon Mobil.

What counts as debt

Companies count differently, so read what is included.

Leases. Leases are included here. Walmart rents part of its stores and warehouses, and $22.3 billion of its $67.1 billion of debt is leases. Without them its ratio of 0.67 would be lower.

More cash than loans. Four of the companies had more cash than debt, which makes net debt negative. Palantir is at −0.83. A negative number here is not a problem with the formula. It means there is no net debt at all.

Why it matters

Loans are cheaper than equity as long as things go well, and they lift return on equity. But interest has to be paid in a bad year too. When rates rise, loans get more expensive, and if things go really badly, lenders come ahead of owners in a bankruptcy.

What counts as a lot depends on the industry. A company with steady income can carry more than one whose sales swing with the economy. So compare within the industry, and with the same company over time.

Debt to equity or the equity ratio?

The equity ratio counts all liabilities, including what is owed to suppliers, against all assets. Debt to equity counts the loans against equity. They often move the same way, but a company can have a low equity ratio and few loans if most of its liabilities are to suppliers.

Test yourself

A company has loans of $300, cash of $100 and EBITDA of $100. What is its net debt to EBITDA?

More numbers are on Oracle's stock page.