The
Definition Of

Debt to total assets ratio

The debt to total assets ratio measures the percentage of the total assets that creditors provide; computed by dividing total debt (both current and log-term liabilities ) by total assets. This ratio indicates the company’s degree of leverage. It also provides some indication of the company’s ability to withstand losses without impairing the interests of creditors. The higher the percentage of debt to total assets, the greater the risk that the company may be unable to meet its maturing obligations.

  Debt to total assets ratio = Total Debt ÷ Total Assets

Share it:

More from this Section

  • Mutual agency
    Mutual agency means that teach partner acts on behalf of the partnership when engaging in partnership business. The act of any partner is binding on all other partners.
  • Continuous audit
    A continuous audit or a detailed audit, as it is sometimes called, is an audit which involves a detailed examination of the books of account at
  • Modified rebuy
    Modified rebuy refers to a business buying situation in which the buyer wants to modify product specifications, prices, terms, or suppliers.
  • Fair value
    Fair value is the amount for which a security could be sold in a normal market. Other counter that, unless a security is going to be sold soon...
  • Owner’s equity statement
    Owner’s equity statement is a financial statement that summarizes the changes in owner’s equity for a specific period of time. The time period is the same as that covered...
  • Materials quantity variance
    Materials quantity variance is the difference between the actual quantity times the standard price and the standard quantity times the standard price for materials.
  • Cash payments journal
    Cash payments (cash disbursements) journal refers to a special journal where companies record all disbursements of cash or a cash payment journal records all cash paid.