Accounting - How do I calculate the debt-equity ratio? Show me a 2023 exam question

The debt-equity ratio is calculated as Total Liabilities divided by Shareholders Equity. From the 2023 exam: Debt-equity ratio = R1 400 000 / (R311 000 + R7 557 600) = R1 400 000 / R7 868 600 = 0.2:1. A ratio of 0.2:1 means the business uses very little borrowed capital relative to equity, which indicates low financial risk. A ratio above 0.5:1 indicates high gearing.