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 ?
The main hypotheses in this study are that, everything else being equal, the countries with high foreign debt ratios have (a) higher sensitivities of external finance premium in the lending rate affecting the GDP growth rate more negatively in the following periods, and (b) a stronger negative feedback on the lending rate upon an initial macroeconomic shock leading to an economic amplification in the following periods, compared to the countries with low foreign debt ratios.
The more turbulent political environment created by September's general election does not alter our assumption that Sweden's fiscal position will gradually improve and debt ratios fall.
Most lenders use two forms of debt ratios: a "front end'' ratio that compares the monthly costs of the proposed new mortgage and other housing expenses with the applicant's monthly income; and a "back end'' ratio comparing all recurring monthly debt obligations, including housing expenses, student loans, credit cards and the like, with the applicant's monthly income.
Sixteen EU Member States had government debt ratios higher than 60% of GDP, with the highest registered in Greece (175.1%), Italy (132.6%), Portugal (129.0 %), Ireland (123.7%), Cyprus (111.7%) and Belgium (101.5%).
The debt ratios of the public institutions will decline from 237 percent in 2013 to under 200 percent in 2017.
Estimates of fiscal space for a sample of 23 high income countries vary by country, but when debt ratios reach the neighborhood of 100 percent of GDP, it becomes increasingly difficult to generate primary budget surpluses to keep pace with higher interest payments on rising debt.
"Prudent fiscal management has combined with the solid performance of the balance of payments and economic growth to result in the steady improvement in key debt ratios [including the debt-to-GDP ratio]," Christian de Guzman, vice president and senior analyst for the sovereign risk group at Moody's, said in a statement issued by Moody's yesterday.
This improvement in Lebanon's debt ratios compares with a net deterioration worldwide in debt ratios, as the average advanced countries debt-to-GDP ratio rose by more than 30 percent over the same period," according to the report.
And it is equally true that high public debt ratios are indicative of something that has gone badly wrong.
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.
The move has been prompted by the deterioration in the city's operating performance in 2010-2011 due to the increase in operating expenditure, which proved larger than originally expected, as well as the considerable rise in debt with weak debt ratios, Fitch explained.
Some studies show that US MNCs have lower debt ratios as compared to those of domestic corporations (DCs) (Burgman 1996; Chen et al.