Insert the information in the form and the calculator will determine the debt ratio
What is the debt ratio?
The debt ratio is a financial ratio that measures the company's leverage. It is the ratio of total debt to total assets and it is expressed as dicimal or percentage. Simply it is the a part of the firm's assets that are financed by debt.
How to calculate debt ratio?
To calculate debt ratio you should use the following formula:
debt ratio = total debts / total assets
Example: Company x has $5,200,000 worth of total assets and $1,400,000 of total liabilities, calculate the debt ratio.
Using the debt ratio formula the answer will be:
debt ratio = total debts / total assets
debt ratio = $1,400,000 / $5,200,000
debt ratio = 26.92%
Why use debt ratio?
The debt ratio is used to determine the amount of risk the company have. The company that has low debt ratio and therefore low risk is liked more because it doesn't rely on borrowed assets so it is more financially stable.
Free Debt Ratios Calculator to find both the front end and back end Debt-to-Income (DTI) ratio for personal finance use. It can also estimate house affordability.The debt-to-asset ratio is the percentage of a company's assets financed by creditors. Try our calculator.