It reflect the relative claim of creditors and shareholders
against the assets of the business.

Debt Equity ratio =long term liabilities/shareholders funds
 
A Debt equity ratio of 2:1 is considered as ideal.
A firm with a debt equity ratio of 2 or less exposes its
creditors relatively lesser risk. A firm with a high debt
equity ratio expects its creditors to greater risk.

It is the relationship between owned funds and the borrowed 
funds.
The debt equity ratio is worked out as:


     Debt-Equity Ratio=Total debt/Total Owner's Equity

The debt to equity ratio, also known as Risk, Gearing or 
Leverage ratio is a financial ratio indicating the relative 
proportion of equity and debt used to finance a company's 
assets. It is calculated by dividing debt by shareholders' 
equity.

it is relationship between total debt and shareholders 
funds.it is also know as financial leverage ratio.

Total liabilities divided by total assets. This indicates 
how much of a corporation's assets are financed by 
lenders/creditors as opposed to purchased with owners' or 
stockholders' funds. If a high proportion of the assets are 
financed by creditors, the corporation is considered to be 
leveraged