IntegrityOCF/Debt#70
Debt-to-Equity Ratio expresses the reliability of reported earnings versus underlying cash flow.
By Javier Sanz, Founder & Lead AnalystEditorially reviewed
Last updated: Reviewed by: Javier Sanz
Formula
Operating Cash Flow / Total Debt
Description
Measures how quickly a company could repay all its debt from operating cash flow alone - a direct test of debt sustainability. Unlike interest coverage which only considers annual interest payments, this ratio addresses the principal as well. Companies with no debt score very high.
Interpretation
Above 0.5 means the company could theoretically pay off all debt in two years from operations. Between 0.2 and 0.5 is reasonable. Below 0.15 signals heavy debt relative to cash generation - the company depends on refinancing to survive.
Related metrics: Debt-to-Assets Ratio, Net Debt to EBITDA (Net Debt/EBITDA), Current Ratio. (Updated 2026)
Further Reading
- SEC EDGAR primary filings on Debt-to-Equity Ratio (D/E)- Primary source filings used to calculate Debt-to-Equity Ratio (D/E).
FAQ
How is Debt-to-Equity Ratio calculated?+
Debt-to-Equity Ratio uses the formula: Operating Cash Flow / Total Debt. S&P 500 D/E averages 1.0-1.5x; utilities 1.5-2x. ValueMarkers refreshes the calculation within 24 hours of each new SEC filing using SEC EDGAR 10-K cash-flow reconciliation + footnote disclosures.
What is a good Debt-to-Equity Ratio value by sector?+
There is no single 'good' value for Debt-to-Equity Ratio — context is sector-driven. S&P 500 D/E averages 1.0-1.5x; utilities 1.5-2x. The /screener exposes sector-relative percentiles for Debt-to-Equity Ratio on every ticker, so you can compare against the sector median rather than the broad-market median.
Which investors use Debt-to-Equity Ratio?+
James Chanos, Carson Block, forensic-accounting analysts cite Debt-to-Equity Ratio as a key input to to detect earnings manipulation and accruals inflation. The academic anchor is Beneish (1999) and Sloan (1996) accruals research. ValueMarkers weights this within the Integrity pillar of the VMCI score (15% of total).
What are the limitations of Debt-to-Equity Ratio?+
Debt-to-Equity Ratio can mislead in false positives in fast-growing or restructuring companies. Pair Debt-to-Equity Ratio with at least two cross-checks from other VMCI pillars — for example, free cash flow trend, balance-sheet quality, and earnings consistency — before drawing a single-metric conclusion.
Where can I see live Debt-to-Equity Ratio data?+
Visit any /stock/[ticker] page on ValueMarkers to see live Debt-to-Equity Ratio data, sector percentiles, and the VMCI composite score that integrates Debt-to-Equity Ratio with 119 other indicators across 100,000+ stocks. The free /screener exposes Debt-to-Equity Ratio as a filterable column.
Used in these guides
Related Integrity Indicators
Debt-to-Assets RatioFCF Conv
Debt-to-Assets Ratio measures the reliability of reported earnings versus underlying cash flow.
Net Debt to EBITDA (Net Debt/EBITDA)Accrual
Net Debt to EBITDA expresses the reliability of reported earnings versus underlying cash flow.
Current RatioCapEx/Rev
Current Ratio measures the reliability of reported earnings versus underlying cash flow.
Quick RatioCapEx/OCF
Quick Ratio is the metric used to the reliability of reported earnings versus underlying cash flow.
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