A ratio greater than 1 - or 100% - means that a company has more liabilities and debt than assets. This means that a significant portion of the debt is financed by its assets. As a reminder: Liabilities include all debts that the company has incurred to creditors. These debts are used to finance the assets. The assets are the company's property: real estate, inventories, advance payments, receivables, investments, securities, cash in bank accounts, etc. Generally speaking, everything that generates income is considered an asset. Keep in mind Example: If a company has a debt-to-equity ratio of 1.4, this means that it uses $1.40 of debt for every $1 of equity. The company's debt is then 140% of its equity. A ratio higher than 1 may be temporarily acceptable if the company is pursuing a strategy of increasing its operations and making significant investments. But outside of these specific cases, a debt ratio higher than 1 is of course a very worrying indicator for a company.