Debt to Asset Ratio Calculator
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Industry Comparison
Understanding Debt-to-Asset Ratio
What is Debt-to-Asset Ratio?
The debt-to-asset ratio is a financial metric that measures the percentage of a company's or individual's assets that are financed by debt. It shows how leveraged an entity is and indicates the proportion of assets funded by borrowing versus equity.
Formula
Debt-to-Asset Ratio = Total Debt / Total Assets
Good Indicators
- Lower ratio indicates less financial risk
- More assets financed by equity
- Better ability to weather economic downturns
- More flexibility in financial decisions
Warning Signs
- High ratio indicates higher financial risk
- Heavy dependence on debt financing
- Potential difficulty in obtaining additional credit
- Vulnerability to interest rate changes
Important Note
Industry standards vary significantly. What's considered healthy for one industry may be concerning for another. Always compare your ratios against industry benchmarks and consider the specific context of your business or personal financial situation.