Debt to equity ratios for healthy businesses - British Business Bank (2024)

Exactly what level of debt is suitable for your business depends on your precise requirements at any one time.

There is a healthy level of debt, or ‘gearing’, that enables a business to grow and capture market share.

It’s not an exact science, however, and what’s regarded as healthy will also differ from industry to industry.

For example, capital-intensive industries such as manufacturing commonly have higher levels of debt than, say, a tech company that operates online.

The debt to equity ratio is a simple formula to show how capital has been raised to run a business.

It’s considered an important financial metric because it indicates (a) how financially stable a company is when facing problems with trading or other operational considerations and (b) what ability it has to raise additional capital for growth.

Debt to equity ratios for healthy businesses - British Business Bank (2024)

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