The ratio is intuitive but distorted by accounting. Buybacks and write-offs shrink shareholders-equity without changing the business, so a mature company returning capital can show alarming gearing while generating plenty of cash.
For that reason cash-flow-based measures such as net-debt-to-ebitda and interest-coverage-ratio have largely displaced it outside banking, where regulatory capital ratios take over.
Example: Northwind Tools has $620M of total debt and $570M of equity, a ratio of 1.09. Excluding the $130M of capitalised leases it is 0.86.
Related: financial-leverage, total-debt, shareholders-equity, net-debt-to-ebitda, dupont-analysis