You plan to purchase debenture bonds from one of two companies in the same industry that are similar in size and performance.

The first company has $350,000 in total liabilities and $1,750,000 in equity.

The second company has $1,200,000 in total liabilities and $1,000,000 in equity.

What does the debt to equity ratio measure and how is it interpreted?

Which company's debenture bonds are less risky based on the debt to equity ratio, calculated as total liabilities/ total equity?