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August 19, 2008

What is the debt ratio?

The debt ratio is also known as the debt to asset ratio or the total debt to total assets ratio.

The calculation of the debt ratio is: Total Liabilities divided by Total Assets.

The debt ratio indicates the percentage of the total asset amounts stated on the balance sheet that is owed to creditors.

A high debt ratio indicates that a corporation has a high level of financial leverage.

Learn more about Financial Ratios.




Comments

4 Responses to “What is the debt ratio?”

  1. Maria on August 23rd, 2008 11:59 am

    Is this also known as the current ratio or is that something else?

  2. vasant on September 6th, 2008 12:10 am

    What is the importance of all ratio for a company ?

  3. sandra84 on November 21st, 2008 10:18 am

    debt ratio=total debt(current and longterm laibilities/total assets

  4. sima on February 5th, 2009 7:02 am

    its the percentage to the total debit after and its different than the deviation to cover the whole sum, total amount needed to cover or to balance the equal credit and debit,
    i hope am not mistaken

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