debt ratio

(redirected from Debt Ratios)

Debt ratio

Total debt divided by total assets.

Debt Ratio

A measure of a company's total debt to its total assets. A ratio less than one means that a company has more assets than debt, while a ratio of more than one means the opposite. A debt ratio is a measure of how risky it would be for a bank to extend a loan to a company, with a higher ratio indicating great risk.

debt ratio

The proportion of a firm's total assets that are being financed with borrowed funds. The debt ratio is calculated by dividing total long-term and short-term liabilities by total assets. Assets and liabilities are found on a company's balance sheet. For example, a firm with assets of $1,000,000 and $150,000 in short-term debts and $300,000 in long-term debts has a debt ratio of $450,000/$1,000,000 or 45%. A low debt ratio indicates conservative financing with an opportunity to borrow in the future at no significant risk. Compare bond ratio.
References in periodicals archive ?
Roughly a third of all potential buyers on the sidelines believe their debt ratios are too high.
Lenders typically refer to this as your debt ratios.
The literature on corporate financial management of the firms listed on the stock markets begin to give special importance to the management of debt ratios which is a very critical issue for the owners, top managers and investors.
High foreign debt ratios, especially public debts to GDP have contributed to the crisis that shook advanced economies including the United States and Europe.
We find that firms substantially reduce their debt burden in "fresh-start" Chapter 11 reorganizations, yet they emerge with higher debt ratios than what is typical in their respective industries.
The debt ratios of Burkina Faso, Ethiopia, Ghana, Mali, Mauritania, Rwanda, Tanzania and Uganda "have again surpassed the Bank's sustainability level of 150% debt-to-export ratio in the eight countries completing the programme".
But if the market continues to behave as if Italy will be bailed out, then a paradox arises: the higher Italy's debt ratio gets and the nearer Italy's situation comes to despair without a bailout, then the greater becomes the incentive for other countries to increase their debt ratios, since if there is an EU takeover of national debts (and that, to repeat, has always been an objective monetary union, so clearly stated by Delors), then countries with below-average debt ratios will lose out to those with above-average debt ratios.
Moody's analysts also wrote: ``Los Angeles' debt profile would be weakened after secession, but even assuming the worst case - that the new, smaller Los Angeles would retain responsibility for all outstanding debt - most of its key debt ratios would still compare favorably to those of other major cities in the country.
Joines (1991) selects three public debt ratios for comparison and regards the 40 percent debt ratio as the long-run historical average.
The district is consistently the fastest growing in the state, and operating and capital needs continue to pressure finances and keep debt ratios high.
The rating also takes into consideration moderately high debt ratios, a slowing amortization rate, and operating/capital pressures associated with more rapid enrollment growth expected over the near term.
Based on increased revenues and EBITDA, debt ratios are expected to improve in fiscal 2006.