Define the inputs before comparing.
Debt/equity is a descriptive relationship between two balance-sheet measures. It is not the same as the statutory asset-coverage calculation applicable to a BDC or a borrowing covenant. Define debt as principal, carrying value or another disclosed measure before entering it. Use common equity rather than silently including preferred capital. State whether subsidiaries, financing vehicles and exempt debt are inside the chosen scope.
The calculation.
Gross debt/equity = defined debt / common equity. Cash-adjusted amount = defined debt − entered cash. Cash-adjusted debt/equity = (defined debt − entered cash) / common equity. Ratios require positive common equity. Cash is a separate optional assumption; subtracting it does not repay debt or establish that it is legally available to all creditors.
Formula version bdc-1.0.2. Decimal arithmetic uses 40 significant digits without intermediate display rounding. Arithmetic precision does not increase the accuracy of the source inputs. Display rounds half up to four decimal places; nonzero values smaller than 0.0001 retain five significant digits. Plain decimals are used through 24 fractional places; longer tiny values use scientific notation. Blank or unavailable inputs stay missing; zero denominators produce “Not defined” with a reason.
Reproduce the arithmetic.
Synthetic balance sheet, USD million: defined debt 800, common equity 1,000 and entered cash 50. Gross debt/equity is 0.8000×. Debt less entered cash is 750 and cash-adjusted debt/equity is 0.7500×. If common equity declines to 800 with debt and cash unchanged, the ratios rise to 1.0000× and 0.9375×. No new borrowing is needed for a falling equity denominator to increase these measures.
How to use: find and match the inputs
Read the statement of assets and liabilities, borrowing notes and schedule of investments together. Record the debt basis, reporting date, consolidated scope and cash restrictions. Separate preferred stock and other senior claims rather than putting them into common equity. Read the issuer statutory asset-coverage disclosure directly; do not attempt to back-solve compliance from this simplified debt/equity worksheet.
Record each source URL, accession if applicable, table or note location, original period and scale. Preserve the issuer definition. The source record below each result distinguishes manual entry from review: no reviewer or review date is invented.
Interpret the result with its denominator.
Both financing transactions and fair-value changes can move the ratio. A cash balance may be restricted, held in a separate entity or required for unsettled investments. Therefore the optional cash adjustment is displayed beside the gross ratio and is never substituted for it. A negative cash-adjusted debt amount can occur when entered cash exceeds debt; that arithmetic outcome is retained without claiming an issuer has no risk.
Assumptions and limitations
No statutory compliance judgment is made. Applicable asset coverage, preferred claims, SBIC exemptions, subsidiary financing, guarantees, covenants and regulatory definitions need a separate legal and accounting analysis. This tool does not estimate borrowing capacity, rating headroom, interest coverage or dividend limits. Zero or negative common equity is not relabeled as an exceptionally low leverage ratio.
No automatic currency, share-count, quarter/YTD or adjusted-to-reported conversion occurs. The common context is a user assertion, not evidence that pasted figures match. Check each original disclosure yourself; a manual input is not a verified company result.
Questions worth asking.
Is 1.0× debt/equity a statutory pass?
The worksheet does not make that determination. Statutory asset coverage uses a separate definition and instrument treatment.
Can cash always be netted?
No. The optional arithmetic adjustment requires a stated assumption about cash scope and availability; it does not alter legal debt.
Primary sources and corrections.
- Investor.gov: publicly traded BDCs ↗
- SEC EDGAR: find the original filing ↗
- Issuer filing: PIK recognition and non-accrual accounting policy (definitions, not example data) ↗
Sources explain the definitions and disclosure context; the synthetic numbers above do not come from these issuers. See our editorial approach or submit a correction with the field, source location and reproducible calculation.