You're the owner of a football team. The team has both debts (like loans for building a new stadium or buying players) and equity (money that you and other investors have put into the team). The Debt/Equity Ratio in business is similar to measuring the balance between the money borrowed and the money invested in your football team.

Debt: This is like the loans or financial obligations the team has. It's money that the team needs to pay back to banks or other lenders.

Equity: This represents the investments made by you and any other owners or shareholders. It's the money that's been put into the team to help it grow and succeed, not expecting to be paid back like a loan.

Ratio Calculation: The Debt/Equity Ratio is calculated by dividing the team's total debts by its total equity. For instance, if your team has $2 million in debts (loans for the stadium, player purchases) and $1 million in equity (investments from owners), the Debt/Equity Ratio would be 2 ($2 million / $1 million).

This ratio helps you understand the financial leverage of your team. A higher ratio means the team is more heavily financed by debt, which can be risky — it's like relying too much on loans for success. A lower ratio means the team is more funded by its owners, which is generally safer but might limit growth potential.

In business, a high Debt/Equity Ratio can indicate potential financial risk, as the company relies heavily on borrowing, while a lower ratio suggests a more conservative approach with less reliance on debt. However, the ideal ratio can vary by industry and business life cycle stage.