<P> The debt - to - equity ratio (D / E) is a financial ratio indicating the relative proportion of shareholders' equity and debt used to finance a company's assets . Closely related to leveraging, the ratio is also known as risk, gearing or leverage . The two components are often taken from the firm's balance sheet or statement of financial position (so - called book value), but the ratio may also be calculated using market values for both, if the company's debt and equity are publicly traded, or using a combination of book value for debt and market value for equity financially . </P> <P> Preferred stock can be considered part of debt or equity . Attributing preferred shares to one or the other is partially a subjective decision but will also take into account the specific features of the preferred shares . </P>

Debt equity ratio market value or book value
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