How to Calculate Debt Ratios
What is Debt Ratios?
Debt ratios measure a company's financial leverage and ability to service obligations. Key ratios include Debt-to-Equity (D/E), Debt-to-Assets, and Interest Coverage. Higher debt ratios signal greater financial risk but can also indicate efficient use of leverage.
Formula
Step-by-Step Guide
- 1Debt-to-Equity = Total Debt / Shareholders' Equity
- 2Debt-to-Assets = Total Debt / Total Assets
- 3Interest Coverage = EBIT / Interest Expense
- 4Debt Service Coverage = Net Operating Income / Total Debt Service
Worked Examples
Frequently Asked Questions
What is Debt Ratios?
Debt ratios measure a company\. Use this calculator for accurate, instant results.
How accurate is the Debt Ratios calculator?
The calculator uses the standard published formula for debt ratios. Results are accurate to the precision of the inputs you provide. For financial, medical, or legal decisions, always verify with a qualified professional.
What units does the Debt Ratios calculator use?
This calculator works with inches. You can enter values in the units shown — the calculator handles all conversions internally.
What formula does the Debt Ratios calculator use?
The core formula is: Debt-to-Equity = Total Debt / Shareholders\' Equity. Each step in the calculation is shown so you can verify the result manually.
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