Debt ratios

Definition

Debt ratios are financial metrics that assess a company's ability to repay its debts by comparing its total debt to assets, equity, or income. These ratios provide insight into the financial health and leverage of a business.

Related terms

Leverage Ratio: Measures the degree to which a company finances its operations through debt compared to its own funds.

Current Ratio:

A liquidity ratio that measures a company's ability to pay short-term obligations with its current assets.

Return on Assets (ROA):

Indicates how efficiently a company is using its assets to generate profit