What does a debt-to-equity ratio above 100 percent tell you about who is funding the firm?

1. The ratio puts total liabilities over owners' equity. 2. A value of exactly 100 percent would mean debt and equity are equal in size. 3. A ratio above 100 percent therefore means the firm has more debt than equity. 4. Since liabilities are money supplied by lenders and equity is money supplied by owners, lenders are then providing more financing than the owners. 5. That is why lenders and investors watch the ratio: they want a healthy mix of debt and equity. 6. Loan agreements often require firms to maintain minimum levels of specific ratios, so crossing such a line can breach a covenant. 7. Customers and suppliers do not appear in this ratio, so neither can be the group it points to. _Source: OpenStax Introduction to Business (CC BY 4.0), Ch 14 "Using Financial Information and Accounting", section 14.7 Analyzing Financial Statements_