debt to total asset ratio
Financial Dictionary — Financial Ratios & Analysis
Definition
Total liabilities divided by total assets. The percentage refers to the ratio of assets funded from debt, if the ratio is high, which means that the company has a leverage.
Use cases, Example & Why it matters
Use cases
- Used to interpret financial statements and evaluate performance, liquidity, solvency, and efficiency.
- Used when comparing periods, peers, and forecasting outcomes.
- Used when comparing periods, peers, and forecasting outcomes.
Example
- Example: Analysts apply **debt to total asset ratio** to assess trends and compare the company with industry benchmarks.
Why it matters
- Why it matters: Turns raw numbers into insights, supports decision-making, and highlights risks and opportunities early.