Debt Ratio

Home » CMA Glossary Term » Ratios and Performance Metrics » Debt Ratio

Debt Ratio, in debt ratio accounting, is a financial metric that quantifies the proportion of a company’s total liabilities to its total assets. It is calculated by dividing total debt by total assets, providing insight into the firm’s leverage and financial stability. A higher debt ratio indicates greater financial risk, as more assets are financed through debt. This ratio is crucial for assessing a company’s long-term solvency and risk profile.

CMA Prep Course

CMA Exam Academy is a proven, 16-week per part online coaching program to help you pass the CMA. The Academy’s comprehensive curriculum will help you pass the CMA exam and achieve your dreams of earning 6-figures per year, ascend to the executive ranks and earn the respect from your peers.