What is the equity ratio?

How it is calculated

Everything a company owns is on one side of the balance sheet. The other side shows how it is paid for: with liabilities or with equity. The equity ratio is the share that is equity.

Microsoft in June 2026: $442 billion / $758 billion = 58.3%.

The equity ratio at the largest companies

Minority owners' equity is counted here, so a number can differ slightly from what a company reports itself.

What is a good equity ratio?

No limit fits everyone. The middle here is 49.1%, but the range is wide.

Banks. JPMorgan Chase is at 8.2%, because taking deposits and lending are the business itself. A bank's buffers are measured in other ways, with capital ratios set by regulators.

Few physical assets, little debt. Palantir is at 84.1%. It has little to borrow for, so almost everything is equity.

Buybacks. A company that hands out a lot of money shrinks its equity. That lowers the ratio with no change in how the business is doing, as the lesson on buybacks explains.

So compare with companies in the same industry, and with the same company over time. A ratio that falls year after year says more than one number on its own.

A high ratio isn't always best

A high ratio is a buffer: if the company loses money, there is more to take from before the owners' capital is gone. But equity that just sits there earns nothing. A lower ratio can give a higher return on equity, and a larger risk when things go badly. The debt-to-equity ratio shows the same thing from the other side, counting only loans.

More numbers are on Microsoft's stock page.