Debt Ratio Calculator: Assess Your Company’s Financial Health Instantly
Use the calculator by typing your company’s total liabilities and total assets, then read the ratio: under 0.50 usually signals healthy leverage (Investopedia, https://www.investopedia.com/terms/d/debtratio.asp). The tool divides liabilities by assets, instantly showing the percentage of assets financed by debt.
Debt Ratio Calculator
Debt Ratio:
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How to use the tool
Enter Total Liabilities – add every outstanding obligation. Example inputs: 210 000 or 95 000.
Enter Total Assets – include cash, inventory, property, investments. Example inputs: 320 000 or 310 000.
Press “Calculate” – the calculator shows your debt ratio and a short interpretation.
Read the result – use the guide below to judge financial health.
Median U.S. non-financial debt ratio: 0.47 (Damodaran, 2023, https://pages.stern.nyu.edu/~adamodar).
A ratio > 1 means liabilities exceed assets (Investopedia, https://www.investopedia.com/terms/d/debtratio.asp).
Utilities commonly run 0.60–0.70 to fund capital assets (Moody’s Industry Outlook, 2022).
Figures must use consistent currency per GAAP ASC 830 (FASB, 2023).
“Assets are resources controlled by the entity” (IFRS Conceptual Framework, 2021).
FAQ
What is the debt ratio?
Debt ratio expresses the share of assets financed by liabilities, revealing leverage and solvency (Investopedia, URL).
How do I calculate it without the tool?
Divide total liabilities by total assets; both figures from the same date and currency (FASB ASC 830).
Why is a value below 0.40 considered safe?
Historic bankruptcy studies show most solvent firms keep ratios under 40 % (Altman, 1968 Z-score study).
Can the ratio be negative?
No. Liabilities and assets are non-negative accounting values, so the quotient cannot drop below zero (IFRS, 2021).
How often should you update it?
Quarterly financial statements provide fresh liability and asset data, matching SEC filing cadence (SEC Form 10-Q guide).
Which sectors tolerate higher ratios?
Utilities and telecoms average 0.60–0.70 due to stable cash flows (Moody’s Outlook 2022).
How does a high ratio affect borrowing costs?
Lenders raise interest when ratios exceed peer medians, adding 50–150 bps risk premium (S&P Global Market Intelligence 2023).
Debt ratio vs. debt-to-equity—what’s the gap?
Debt ratio compares liabilities to assets; debt-to-equity compares liabilities to shareholder equity (Corporate Finance Institute, URL).
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