Overview

The debt to asset ratio is a type of leverage financial ratios that measure the proportion of a company's assets financed with debt. The formula for calculating the debt to asset ratio is as follows:

Debt/Asset Ratio = (Short-term Debt + Long-term Debt) / Total Assets

The debt/asset ratio is a common metric used by creditors to assess a company's ability to repay its debt and whether they should issue additional loans to the company based on its leverage. The higher the ratio, the greater the degree of leverage and financial risk for the business. It is also a good ratio for investors to see how solvent a company is, its ability to meet its current and future obligations, and the ability to generate a return on investment.

Share
Reviews Add a review
No reviews yet

More From Corporate Finance Institute®

Browse our top rated business templates. See All
REIT Financial Model Template
3,346
6
This REIT financial model template acts as a guideline for modeling a real estate investment trust (REIT). This model will…
Energy Industry Comps Template Energy Industry Comps Template
3,871
270
This energy industry comps template provides a guideline and example of what a comparables universe would look like for a…
Financial Institution Dividend Discount Model
4,734
359
The financial institution dividend discount model uses future dividends to find the implied share price. This model is based on…
Loan Payment Calculator
4,248
0
The loan payment calculator allows users to determine the principal and interest payment each month until the full balance of…
DDM - Excel Dividend Discount Model Template
5,627
622
The dividend discount model template allows investors to value a company base on future dividend payments. This is based on…
Non-directional trading strategy template Non-directional Trading Strategies Template
3,779
0
The non-directional trading strategies template allow users to determine the profit when buying options. This template focuses on non-directional strategies…
See All