Debt to asset ratio shows the relationship between a company’s total debt with total asset.
The debt to asset ratio measures the percentage of total assets financed. It is computed by dividing the total debt of a company with its total assets.
It shows the amount of debt obligation a company has for each unit of an asset that it owns, this enables the viewer to determine the financial risk of a business. This ratio measures the extent to which borrowed funds support the firm’s assets.
Formula of Debt to asset ratio
Debt to asset ratio = Debt/Total Asset
Debt = Long Term Loan
Total Asset = Non-Current Asset ( Net of Depreciation)+Current Asset
Example of how to calculate Debt to Asset Ratio
