1. What is Debt To Assets Ratio?

The Debt To Assets Ratio is a financial metric that indicates what proportion of a company's assets is financed through debt. It shows the percentage of assets that are being financed by creditors rather than shareholders.

2. How Does the Calculator Work?

The calculator uses the Debt To Assets Ratio formula:

Where:

• \( \text{Total Debt} \) — All outstanding debts and obligations (USD)
• \( \text{Total Assets} \) — Everything the company owns (USD)

Explanation: The ratio measures financial leverage and indicates what percentage of assets is financed by debt.

3. Importance of Debt To Assets Ratio

Details: This ratio is crucial for assessing a company's financial risk. A higher ratio indicates more leverage and higher financial risk, while a lower ratio indicates more conservative financing.

4. Using the Calculator

Tips: Enter total debt and total assets in USD. Both values must be positive numbers, with assets greater than zero.

5. Frequently Asked Questions (FAQ)

Q1: What is a good Debt To Assets Ratio?
A: Generally, a ratio below 0.5 is considered safe, while above 0.6 may be risky. However, this varies by industry.

Q2: How is this different from Debt To Equity Ratio?
A: Debt To Assets compares debt to total assets, while Debt To Equity compares debt to shareholders' equity.

Q3: Can the ratio be greater than 1?
A: Yes, if total debt exceeds total assets, indicating negative equity.

Q4: How often should this ratio be calculated?
A: It should be monitored regularly, typically quarterly with financial statements.

Q5: Does this ratio apply to individuals?
A: Yes, individuals can use it to assess personal financial leverage, though standards differ from businesses.