The debt ratio measures the amount of leverage used by a company in terms of total debt to total assets.
This ratio varies widely by industry, so capital-intensive businesses tend to have much higher debt ratios than others.
A company’s debt ratio can be calculated by dividing total debt by total assets.
A debt ratio greater than 1.0 or 100% means the company has more debt than assets, while a debt ratio of less than 100% indicates the company has more assets than debt.
Some sources believe that the debt ratio is equal to the total amount of liabilities divided by the total amount of assets.
Accounting ratios, an important subset of financial ratios, are a group of metrics used to measure a company’s performance and profitability based on its financial statements.
The acid test, or quick ratio, compares a company’s shortest-term assets to its shortest-term liabilities to see if the company has enough cash to pay off its immediate liabilities, such as short-term debt.
Activity Ratio broadly describes any type of financial measure that helps investors and analysts evaluate how effectively a company is using its assets to generate revenue and cash.
Performance Based Management (ABM) is a means of analyzing a company’s profitability by looking at every aspect of its business to determine its strengths and weaknesses.
Benefit Cost Ratio (BCR) is a measure showing the relationship between the relative costs and benefits of a proposed project, expressed in monetary or qualitative terms.
The CAPE ratio is used to analyze the long-term financial performance of a public company, taking into account the impact of various economic cycles on the company’s profit.
Capital expenditures are payments for goods or services that are recognized or capitalized on a company’s balance sheet, rather than expensed on the income statement.