Calculate the Debt Ratio (Financial Dependency Ratio) — the proportion of a company's assets that are financed by debt. This is a key indicator of financial leverage and risk.

Debt Ratio: 0.50 (50.00%)

Note: Debt Ratio = Total Liabilities ÷ Total Assets. A value above 0.6–0.7 indicates higher financial risk.

What is the Debt Ratio?

The Debt Ratio, also known as the Financial Dependency Ratio, is a financial metric that measures the proportion of a company's assets that are financed through debt. It is calculated by dividing total liabilities by total assets[citation:1][citation:3].

Debt Ratio = Total Liabilities ÷ Total Assets

This ratio is a key indicator of a company's financial leverage and risk. A higher debt ratio means the company relies more heavily on borrowed funds, which can increase financial risk, especially during economic downturns. A lower ratio indicates a more conservative capital structure with greater reliance on equity financing[citation:3].

The debt ratio is widely used by:

• Lenders — to assess creditworthiness and the ability to repay loans.
• Investors — to evaluate whether a company is over-leveraged.
• Analysts — to compare companies within the same industry.

The generally accepted normative value is around 0.5 (50%), meaning half of the assets are financed by debt. A value up to 0.6–0.7 is often considered acceptable, but exceeding this threshold signals higher financial risk and potential insolvency[citation:1][citation:12].

How to Use This Calculator

1. Enter Total Liabilities: Input the total amount of all debts and obligations (current + long-term) in dollars. Include loans, bonds, accounts payable, and other liabilities.
2. Enter Total Assets: Input the total value of all assets (current + non-current) in dollars.
3. Calculate: Click the “Calculate Debt Ratio” button or press Enter on your keyboard to see the result.
4. Reset: Use the “Reset” button to clear your inputs and restore the default example.
5. Interpretation: The result shows the debt ratio as a decimal and percentage. For example, if liabilities are $500,000 and assets are $1,000,000, the debt ratio is 0.5 (50%). This means half of the company’s assets are financed by debt[citation:3].