# Why debt/equity ratio is limited to between 0 and 9

Is there any economic reason that debt/equity is limited to between 0 and 9 as in the picture below?

This research examines the impact of the law on firms' financial flexibilities.

• May be the author wanted to discard outliers before calculating the mean. Apr 15 at 23:03

When a company is in near-bankrupt state, it's equity $$\rightarrow0$$, meaning that D/E goes $$\rightarrow\infty$$. Including such observations would make the resulting mean D/E meaningless. This is why boundaries are needed