How Do You Calculate Debt Ratio?

Calculating the debt ratio involves obtaining two key figures from a company’s financial statements: total debt and total assets. Once these values are identified, apply the formula:

Debt Ratio = Total Debt / Total Assets

This computation yields a decimal value, which can be multiplied by 100 to express the ratio as a percentage. The resulting percentage indicates the proportion of a company’s assets that are financed through debt, offering insights into its financial leverage and risk profile.