Debt ratio is calculated as a company's total debts to its total assets, which quantifies how leveraged a company is. It indicates how much a company relies on the debts to finance its assets.The higher the debt ratio is, the more risky the operations are; this means that the company needs to bear a higher proportion of cash flow that is generated from operations to pay the interests on its debts. The one and only predefined KPI to calculate Debt Ratio is: -
Debt Ratio
Advantages of finding out Debt Ratios: -
Provide useful information about the entity’s Financial leverages.
Easy to understand by investors and shareholders for the analysis required before investing.
Easy to calculate as a result of the formula being very simple (Debt Ratio = Total liabilities / Total Asset)
This ratio measures in percentages or time which makes it more favorable for Investors and Shareholders.
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