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What does the Debt Ratio measures?

What does the Debt Ratio measures?

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Answer #1

Debt Ratio is a financial ratio that gives us the company's assets (in terms of percentage) that are provided via debt.
Mathematically, It is the ratio obtained when total debt is divided by total assets.

For example, a company with $3 million in total assets and $1 million in total liabilities would have a debt ratio of or 33.33%.

In a way, debt ratio measures the extent of a company's leverage.

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