Debt Ratio

The share of assets financed by creditors rather than owners. It and the equity ratio add up to one.
Finance
Leverage and solvency

Debt Ratio formula

\[ \dfrac{\text{Total liabilities}}{\text{Total assets}} \]

Terms

  • Total assets, closing balance: Everything the company owns or controls: non-current plus current assets.
  • Total liabilities, closing balance: Everything the company owes to others: current plus non-current liabilities.

Result

Debt Ratio is a ratio. Lower is better.

Target

There is no general target; compare with the company’s own history and with peers in the same industry.

Debt Ratio in Business Central

Total assets (closing balance)

55 posting accounts in total.

The full account list is on the Total assets page.

Total liabilities (closing balance)

33 posting accounts in total.

The full account list is on the Total liabilities page.

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