Net Debt-to-Equity (Net D/E)
Leverage after accounting for cash on hand.
Definition
Net D/E adjusts the standard D/E ratio by subtracting cash and short-term investments from total debt. It reflects the net leverage position — how much debt remains if all cash were used to repay it.
Formula
Only meaningful when Equity > 0.
Interpretation
| Range | Assessment |
|---|---|
| < 0 | Net cash — company has more cash than debt |
| 0 – 0.5 | Low net leverage |
| 0.5 – 1.0 | Moderate net leverage |
| > 1.0 | High net leverage |
A company with high D/E but also high cash reserves may have a much lower Net D/E, indicating the leverage is less risky than it appears.
In Finsco
Computed by the audit debt-discipline command.
Related Metrics
- D/E Ratio — gross leverage without cash adjustment
- Interest Coverage — debt serviceability