what does the long term debt to total assets ratio tell you 
a year over year decrease in a company s long term debt to total assets ratio may suggest that it is becoming progressively less dependent on debt to grow its business although a ratio result that is considered indicative of a healthy company varies by industry generally speaking a ratio result of less than 0 5 is considered good example of long term debt to assets ratioif a company has 100 000 in total assets with 40 000 in long term debt its long term debt to total assets ratio is 40 000 100 000 0 4 or 40 this ratio indicates that the company has 40 cents of long term debt for each dollar it has in assets in order to compare the overall leverage position of the company investors look at the same ratio for comparable firms the industry as a whole and the company s own historical changes in this ratio if a business has a high long term debt to assets ratio it suggests the business has a relatively high degree of risk and eventually it may not be able to repay its debts this makes lenders more skeptical about loaning the business money and investors more leery about buying shares in contrast if a business has a low long term debt to assets ratio it can signify the relative strength of the business however the assertions an analyst can make based on this ratio vary based on the company s industry as well as other factors and for this reason analysts tend to compare these numbers between companies from the same industry the difference between long term debt to asset and total debt to asset ratioswhile the long term debt to assets ratio only takes into account long term debts the total debt to total assets ratio includes all debts this measure takes into account both long term debts such as mortgages and securities and current or short term debts such as rent utilities and loans maturing in less than 12 months both ratios however encompass all of a business s assets including tangible assets such as equipment and inventory and intangible assets such as accounts receivables because the total debt to assets ratio includes more of a company s liabilities this number is almost always higher than a company s long term debt to assets ratio 