Rotate your device back to portrait Mode!
Rotate your device back to portrait Mode!
This ratio measures how much debt a business is encumbered by compared to the amount invested by its shareholders. It indicates the amount of liabilities the business has for every dollar of shareholders' equity. Equity is defined as the assets available for investment or financing after lenders with priority security have been satisfied..
The higher the ratio, the higher the risk a business carries.
Our online calculator uses a simple formula: Total Liabilities ÷ Shareholders' Equity = Debt-to-Equity Ratio. Think of it this way: For every dollar the owners have invested (equity), how many dollars does the business owe to others (debt)?
For example, if a Canadian business has CAD$500,000 in debt and CAD$250,000 in equity, its debt-to-equity ratio would be 2.0, meaning it owes CAD$2 for every CAD$1 of owner investment.
Just enter the two numbers below and click “calculate”:
A higher ratio means higher risk:
Different businesses need different ratios. For instance, a long-established apartment building might safely operate with more debt than a new restaurant.
Before making an offer on any business or commercial property in Canada, use this calculator to understand its debt burden. This simple tool helps you evaluate the financial risk and make smarter investment decisions.
Why this Marketplace was Created
Frustrated by the timely process of searching for businesses and commercial properties on the market, the founders at Businesses 4 Sale created a platform to transform the business/commercial property buying and selling experience. The database compiles the most relevant information from multiple industry sources, making it easy for future business/commercial property owners and sellers to find exactly what they are looking for.