The debt ratio measures the extent of a company's leverage.
Debt Ratio: Total Liabilities/Total Assets
Example: The Round Number CompanyTotal Assets = 300; Total Liabilities = 160 Debt Ratio = 140/300 = 0.47 |
Utilities and manufacturing are 'capital-intensive industries', they are more likely to have higher debt ratios .
Service companies are generally less capital-intensive and will have lower debt ratios.
See the discussion at Leverage.
term list.