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 are 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:

• Total Debt — All outstanding debts and liabilities
• Total Assets — Everything the company owns

Explanation: The ratio measures financial leverage and risk. A higher ratio means more assets are financed by debt.

3. Importance of Debt To Assets Ratio

Details: This ratio is crucial for investors and creditors to assess a company's financial health and risk level. It helps determine the company's ability to pay off its debts with its assets.

4. Using the Calculator

Tips: Enter total debt and total assets in dollars. Both values must be positive, and total assets cannot be zero.

5. Frequently Asked Questions (FAQ)

Q1: What is a good Debt To Assets Ratio?
A: Generally, a ratio below 0.5 (50%) is considered safe, while above 0.6 (60%) may indicate higher risk. Ideal ratios vary 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 (negative equity), the ratio will be greater than 1 (100%).

Q4: How often should this ratio be calculated?
A: Typically calculated quarterly with financial statements, or when significant financial changes occur.

Q5: Does this include all liabilities?
A: Some analysts use only interest-bearing debt, while others include all liabilities. Be consistent in your calculations.