This illustrated glossary uses Visual Finance™ to provide a contextualized 'big picture' view of financial results. The examples feature data for the Round Number Company—a 'made-up company' with simplified figures. The Appendix presents an explanation of how to read Visual Finance as well as the financial statements and VF views for the Round Number Company.
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.
The above is our generic explanations of common corporate financial terminology. Actual meanings can vary widely from company to company; in order to have the correct internal definition you need to ask your Finance Department, "What do you mean by that?"
term list.