When examining a company's financial health, it is important to understand the concept of leverage, which is the use of borrowed funds to finance operations. One way to measure leverage is by calculating the debt-to-equity ratio, which is derived by dividing a company's total long term debt by its total shareholder equity. This ratio provides insight into a company's level of risk and can help investors make informed decisions. It is crucial to analyze this ratio in conjunction with other financial metrics in order to fully understand a company's financial position.
