A debt/equity ratio of 25% means?

A debt/equity ratio of 25% indicates that for every $1 of equity (ownership in the company), there is $0.25 of debt owed to creditors. This ratio is a financial metric used to assess a company's financial leverage and risk. It highlights the relationship between the funds provided by shareholders and the funds borrowed from creditors.

In financial analysis, a 25% debt/equity ratio suggests a relatively low level of debt compared to equity, which can imply that the company is not overly reliant on borrowed funds to finance its operations. This situation may indicate financial stability and potentially lower risk for investors since a smaller proportion of the company's capital is financed through debt.

The other options do not accurately reflect what a debt/equity ratio represents. Therefore, understanding this ratio is essential for assessing a company's financial health and risk profile.