The debt-to-equity ratio (D/E) is a financial metric used to evaluate a company's leverage by comparing its total debt to shareholders' equity. It is calculated by dividing total liabilities by total shareholders' equity and indicates the proportion of financing provided by creditors versus shareholders. A high D/E ratio suggests that a company relies heavily on debt financing, which may increase financial risk and interest expenses. Conversely, a low D/E ratio indicates a conservative capital structure with less reliance on debt. The optimal D/E ratio varies by industry and depends on factors such as business risk, profitability, and growth prospects. Investors and creditors use the D/E ratio to assess a company's financial stability, solvency, and ability to meet its debt obligations.