Data from Stats SA’s Annual financial statistics (AFS) report shows that the debt-to-equity ratio for the private sector as a whole has dropped since 2005.

The debt-to-equity ratio is a measure of how much debt a company or industry has incurred to finance its operations relative to equity. Debt refers to how much an industry has borrowed, inclusive of related costs, to fund its operations. Equity refers to how much has been invested by shareholders and how much profit has been retained.

A higher debt-to-equity ratio indicates that more debt (e.g. bank loans) is being used. A lower ratio indicates more reliance on capital from shareholders or retained income.

There was R1,86 of debt (rounded to 1,9 in the infographic below) held for every R1 of equity in 2014, falling from R2,11 in 2005.

The construction industry recorded the highest debt-to-equity ratio (3,3) in 2014.

The industry that recorded the largest rise in the debt-to-equity ratio was the electricity, gas and water supply industry, climbing from 1,6 in 2005 to 2,9 in 2014. Business services, on the other hand, recorded the largest fall, from 2,5 to 1,5 over the same period.

Click here to browse the AFS archive.