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Debt to assets ratio calculator
The debt to assets ratio reveals the extent to which a company is financed
with debt. Creditors look at this ratio when they are trying to decide
what the chances are you won't be able to make good on your business
loans and obligations. A healthy company has a good balance between
assets provided through debt and assets provided by the company's
owners. As you might guess, creditors like this number to be low.
The lower it is, the greater the chance your company will be able
to ride out rough times.
The formula:
Total debt divided by total assets
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How to use this calculator
You'll find the numbers you need to calculate your debt to assets
ratio at the bottom of your company's latest balance sheet.
- Fill in your company's total assets.
- Fill in your total debt.
- Press "calculate."
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The number
tells you what portion of your assets are paid for with borrowed
money. A 78 percent debt to assets ratio means that your creditors
have supplied about 78 cents of every dollar of your company's assets.
Companies with a high debt to assets ratio may have trouble borrowing
any more money or may have to pay a higher interest rate on a loan
than it would if its ratio were lower.
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