Your debt to equity ratio can also be found on your balance sheet. This is calculated by dividing your total liabilities by the shareholder equity. The lower the number the better – a high ratio suggests the business is funded mostly by debt. A lower number shows it is funded more by shareholders and is likely to be more sustainable. Debt is often required, especially in the early years, or in periods of growth and transition, however high debt puts the company at higher risk. It is important to fully understand why your ratio is the amount it is. If you know that you are in a period of rapid expansion, you would expect a higher number, however, it will generate more revenue in the future.