A debt to owners' equity ratio of 25% indicates that a firm has more debt than equity.

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Debt to owners' equity ratio = Total liabilities divided by total owners' equity [Total liabilities/total owners' equity]. A percentage less than 100% or 1.00 means that the company is using fewer borrowed funds than contributed funds to run the business. Borrowing provides 25% of the funds used to run the business, while stockholders are contributing 75% of the funds used to run the business.

A Debt to Owners' Equity Ratio of 25% Indicates That