Debt to equity compares what the business has borrowed against what it is worth on paper. Lower means more of the company is funded by you rather than by lenders.
Why it is not simply "lower is better"
Borrowing is how most service businesses buy the vehicle or the equipment that lets them earn more. A business with no debt and no capacity to take on work is not in a stronger position than one carrying a truck loan it comfortably services.
What the ratio measures is exposure: how much of a downturn the business can absorb before the borrowing becomes the problem rather than the tool.
Reading it
Low — most of the business is yours. Resilient, and possibly under-invested if growth is being held back by equipment you will not finance.
Moderate — normal for a business that has bought vehicles or equipment.
High — a large share of the business belongs to lenders. Manageable while revenue holds, and unforgiving when it does not, because the payments continue at the same rate whether the phone rings or not.
The number that matters more
Whether you can service the debt month to month is a better day-to-day question than what the ratio is, and it has its own measure — see debt service coverage.
A business can carry a high ratio comfortably on strong, predictable income, and a low one uncomfortably on lumpy income. The ratio does not know which you are.
Where the inputs come from
Both halves come from your balance sheet, so the figure is only as good as what is recorded there. Loans tracked properly in debts is what makes it real.