Our Debt-to-Assets Ratio Calculator helps you assess a company’s financial structure by comparing its total debt to its total assets.

This ratio reveals the proportion of a company’s assets that are financed by debt, which is crucial for evaluating financial risk.

## Debt-to-Assets Ratio Calculator

### How to Interpret the Debt-to-Assets Ratio

The Debt-to-Assets Ratio indicates how much of a company’s assets are financed through debt. It is used to assess financial risk and leverage.

Debt-to-Assets Ratio | Interpretation |
---|---|

Below 40% | Low ratio: Healthy financial position, less reliance on debt. |

40% to 60% | Moderate ratio: Balanced use of debt and equity. |

Above 60% | High ratio: Higher financial risk, significant reliance on debt. |

## Formula and Calculation

The Debt-to-Assets Ratio is calculated by dividing a company’s total debt by its total assets. This gives a percentage that indicates the proportion of assets funded by debt.

**The formula is as follows:**

In this formula, “Total Debt” represents the sum of all short-term and long-term liabilities, while “Total Assets” includes both current and non-current assets. Multiplying by 100 converts the result into a percentage.

For example, if a company has $500,000 in debt and $1,000,000 in assets, the Debt-to-Assets Ratio would be calculated as follows:

\(\text{Debt-to-Assets Ratio} = \frac{500,000}{1,000,000} \times 100 = 50\%\)This means that 50% of the company’s assets are financed through debt.

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