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Background

I was quickly investigating Boeing's (BA) Debt-to-Equity ratio and received a very high number. I looked around online and have confirmed that BA has recently taken on a lot of debt, but am not reaching the same calculations as Morningstar or YCharts.

INPUTS

2016 Annual Debt: 89120.0

2016 Annual Shareholder Equity: 877.0

Calculation

Debt-to-Equity = 89120 / 877 = 101.6

Question

Ycharts shows a Debt-to-Equity ratio of [12.01]. This should be a simple calculation so how am I getting different numbers?

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1 Answer 1

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The ratio is calculated using $$ \dfrac{\text{Short and Long Term Debt}}{\text{Shareholders' Equity}} = \dfrac{327 + 9487}{817} = 12.01 $$

So the value matches your other source.

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  • $\begingroup$ Thank you. I agree that your calculation is correct, but why does the following link declare "Debt - Equity Ratio = Total Liabilities / Shareholders' Equity" (investopedia.com/terms/d/debtequityratio.asp)? $\endgroup$
    – jonplaca
    Apr 20, 2017 at 2:54
  • $\begingroup$ If you read the bottom of the article you linked, it discusses different formulations for the formula. You should verify exactly how your data vendor is calculating the ratio. For example, here are the definitions for Morningstar and YCharts. $\endgroup$
    – msitt
    Apr 20, 2017 at 19:49

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