
Debt Ratios: Introduction
By Richard Loth (Contact  Biography)
The third series of ratios in this tutorial are debt ratios. These ratios give users a general idea of the company's overall debt load as well as its mix of equity and debt. Debt ratios can be used to determine the overall level of financial risk a company and its shareholders face. In general, the greater the amount of debt held by a company the greater the financial risk of bankruptcy.
The next chapter of this Debt Ratios section (Overview of Debt) will give readers a good idea of the different classifications of debt. While it is not mandatory in understanding the individual debt ratios, it will give some background information on the debt of a company. The ratios covered in this section include the debt ratio, which is gives a general idea of a company's financial leverage as does the debttoequity ratio. The capitalization ratio details the mix of debt and equity while the interest coverage ratio and the cash flow to debt ratio show how well a company can meet its obligations.
To find the data used in the examples in this section, please see the Securities and Exchange Commission's website to view the 2005 Annual Statement of Zimmer Holdings.


Leverage Ratio
Any ratio used to calculate the financial leverage of a company ... 
Capitalization Ratios
Indicators that measure the proportion of debt in a company’s ... 
LongTerm Debt To Capitalization Ratio
A ratio showing the financial leverage of a firm, calculated ... 
Debt Load
The amount of debt or leverage that a company is carrying on ... 
Current Ratio
The current ratio is a liquidity ratio measuring a company's ... 
Long Term Debt To Total Assets Ratio
A measurement representing the percentage of a corporation's ...

What is the difference between the debt ratio of a company and the debt ratio of ...
Discover the different financial evaluation measures that are most commonly applied to individuals and corporations, respectively. Read Answer >> 
How can I use the debttocapital ratio to evaluate a stock?
Understand the significance of the debt to capital ratio of financial leverage, and learn how investors and analysts make ... Read Answer >> 
Over what duration should I be evaluating a company's total debt to total assets ...
Learn what duration to use when analyzing the total debt to total assets ratio in a company and how to track a company's ... Read Answer >> 
What are financial risk ratios and how are they used to measure risk?
Explore some of the primary financial risk ratios that investors and analysts commonly use to evaluate a company's overall ... Read Answer >> 
What are the different capitalization ratios?
Learn about capitalization ratios, three different ratios that measure debt in relation to capital structure and how to calculate ... Read Answer >> 
What is the most widely used gearing ratio?
Understand the most commonly used gearing, or leverage, ratio used to evaluate a company's financial condition, the debt ... Read Answer >>