Q.Debt Equity ratio is a measure of :

Debt Equity ratio = Long-term Debt ÷ Shareholders' Funds; it measures long-term solvency.

The Debt Equity ratio relates the long-term borrowed funds of a firm to the owners' (equity) funds:

$\text{Debt Equity Ratio} = \frac{\text{Long-term Debt}}{\text{Shareholders' Funds (Equity)}}$

• A lower ratio means owners' funds dominate, so outsiders' long-term claims are well covered — the firm is more solvent in the long run. …