what is the total debt to total assets ratio 
the debt ratio or total debt to total assets is calculated by dividing a company s total debt by its total assets it is also called the debt to assets ratio it is a leverage ratio that defines how much debt a company carries compared to the value of the assets it owns using this metric analysts can compare one company s leverage with that of other companies in the same industry this information can reflect how financially stable a company is the higher the ratio the higher the degree of leverage dol depending on averages for the industry there could be a higher risk of investing in that company compared to another investopedia candra huffunderstanding the total debt to total assets ratiothe total debt to total assets ratio analyzes a company s balance sheet the calculation includes long term and short term debt borrowings maturing within one year of the company it also encompasses all assets both tangible and intangible it indicates how much debt is used to carry a firm s assets and how those assets might be used to service that debt therefore it measures a firm s degree of leverage debt servicing payments must be made under all circumstances otherwise the company would breach its debt covenants and run the risk of being forced into bankruptcy by creditors while other liabilities such as accounts payable and long term leases can be negotiated to some extent there is very little wiggle room with debt covenants a company with a high degree of leverage may thus find it more difficult to stay afloat during a recession than one with low leverage the total debt to total assets formula is the quotient of total debt divided by total assets as shown below total debt includes both short term and long term liabilities td ta short term debt long term debt total assets begin aligned text td ta frac text short term debt text long term debt text total assets end aligned td ta total assetsshort term debt long term debt this calculation generally results in ratios of less than 1 0 100 