Question

Explain what can occur to cause an increase in the debt ratio. (about 50-100 words)

Answer 1

It is financial ratio which measures the maximum leverage of a company. It can also be ratio of total debts to assets represented in percentage or fraction.
It very well may be deciphered as the extent of an organization's benefits that are financed by obligation.

A proportion greater than 1 shows that an impressive bit of obligation is subsidized by resources. As such, the organization has a larger number of liabilities than resources/assets. A high proportion additionally demonstrates that an organization might be putting itself at a danger of default on its advances if financing costs were to rise unexpectedly. A proportion under 1 means the way that a more noteworthy part of an organization's advantages is funded by equity.