Warren Buffett has said he prefers companies with a D\/E ratio below 0.5. Peter Lynch put it more bluntly: \"A company with no debt can't go bankrupt.\" Two of the greatest investors in history, and both of them treat the debt to equity ratio as one of the first filters before they even look at anything else.<\/p>\n\n\n\n
So what is debt to equity ratio, exactly? It tells you one thing immediately: how much of a company's operation runs on borrowed money versus its own capital. In simple terms, it measures how much borrowed money a company uses for every rupee of its own capital.<\/p>\n\n\n\n
Before you buy a single share on NSE or BSE, this number can save you from picking a company that is quietly drowning in debt. Or help you spot one that is using debt intelligently to grow faster than its peers.<\/p>\n\n\n\n
This guide gradually goes into depths beyond the formula. You will find sector-specific benchmarks for Indian markets, a five-point screening framework, and the hidden risk factors most articles skip entirely, including promoter pledging and PSU-specific interpretation.<\/p>\n\n\n\n
Related Reading<\/a>: High Book Value stocks screen<\/a> |<\/em> High Book Value Low PE Stocks<\/a><\/p>\n\n\n\nTable Of Contents<\/h2>