debt ratio

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 ?
Global Banking News-May 21, 2015--Vietnam central bank to bring down bad debt ratio
01, it can be concluded that panel research regression model which composed of independent, control and dependent variables is a suitable model and independent and control changes can describe debt ratio changes.
The first debt ratio is your housing payment as a percentage of your gross income.
The worry here is that the GDP drop resulting from "austerity" might be so large that the debt ratio increases.
So though Germany's official debt ratio is about 80 per cent of its GDP, its ECB liabilities increase this debt ratio to over 100 per cent of GDP.
The debts of the government, both foreign and domestic debts, have continued to increase since 2006 but not as fast as the economic growth, therefore, the debt ratio to the country's GDP has been declining--to 26% by the end of 2006 from 47% a year before and 89% in 2000.
He also finds that firms have higher debt ratios than their industry peers upon emerging from Chapter 11 but attributes this to an increase in the optimal debt ratio during the Chapter 11 process rather than to the inability of firms to extinguish debt.
The report added that the enhanced HICP initiative cut the debt ratio in half for 18 countries, but in eight of the countries in Africa the ratios have come to exceed, once again, the HIPC thresholds.
If one factors recession and disinflation into a budgetary equation that already has a probable 6 percent deficit and a debt ratio above 100 percent among its terms, then one needs neither a spreadsheet nor even the back of an envelope to calculate that Italy's debt ratio is going to explode upwards.
This paper extends the work of Barro (1979), Eisner (1992), Joines (1991) and others to examine the federal government debt's impact on economic growth and to test if an optimal debt ratio exists that will maximize the economic growth rate.
Dixie's relatively high debt ratio limits its financial flexibility.
For instance, having a debt ratio of 20 points means your overall housing expenses account for 20% of your gross income.