Debt Ratio

What Does Debt Ratio Mean?
A ratio that indicates what proportion of debt a company has relative to its assets. The measure gives an idea to the leverage of the company along with the potential risks the company faces in terms of its debt-load.

Investopedia explains Debt Ratio
A debt ratio of greater than 1 indicates that a company has more debt than assets, meanwhile, a debt ratio of less than 1 indicates that a company has more assets than debt. Used in conjunction with other measures of financial health, the debt ratio can help investors determine a company's level of risk.

Related Terms

Acid-Test Ratio
Asset
Capital Structure
Debt/Equity Ratio
Delayed Draw Term Loan
Leverage
Long-Term Debt
Net Debt
Zombie Debt
More Related Terms

Related Links

Debt Reckoning - Learn about debt ratios and how to use them to assess a company's financial health. You could save a lot of money!
Evaluating A Company's Capital Structure - Learn to use the composition of debt and equity to evaluate balance sheet strength.
To Invest Or To Reduce Debt, That's The Question - Find out how you can make use of that excess cash and improve your financial situation.
Ratio Analysis Tutorial - If you don't know how to evaluate a company's present performance and its possible future performance, you need to learn how to analyze ratios.
Reading The Balance Sheet - Learn about the components of the statement of financial position and how they relate to each other.
Debt Ratios: Introduction - Find out how much that company owes and why it''s important!

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