DEBT RATIO

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The debt ratio is a financial ratio that measures the extent of a company’s leverage. It is defined as the ratio of total debt to total assets, represented as a decimal or percentage. It could also be referred to as the debt-to-assets ratio.
Debt Ratio = Total Debt/Total Assets 

 The higher the debt ratio, the more leveraged a company is, implying greater financial risk. A debt ratio greater than 100% tells you that a company has more debt than assets. Meanwhile, a debt ratio less than 100% indicates that a company has more assets than debt. Debt ratio used in conjunction with other measures of financial health, can help investors determine a company’s risk level.

 Investdata Academy

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