The debt ratio is a financial ratio that measures the extent of a company's leverage. The debt ratio is calculated by dividing a company's total liabilities by its total assets. A high debt ratio indicates that a company is highly leveraged and may be at risk of defaulting on its debt obligations. A low debt ratio indicates that a company has a strong financial position and is less likely to default on its debt obligations. What are the 5 major categories of ratios? 1. Liquidity Ratios

2. Asset Management Ratios

3. Debt Management Ratios

4. Profitability Ratios

5. Market Value Ratios What are the 4 financial ratios? 1. Liquidity Ratios

2. Leverage Ratios

3. Efficiency Ratios

4. Profitability Ratios

### How is debt equity ratio calculated?

There are two ways to calculate the debt equity ratio:

1) The first way is to simply divide the total debt by the total equity.

2) The second way is to divide the total liabilities by the total shareholder's equity.

Both ways will give you the same debt equity ratio.

### What are leverage ratios types?

There are several types of financial ratios that are used to measure a company's leverage. The most common are the debt-to-assets ratio and the debt-to-equity ratio.

The debt-to-assets ratio measures the percentage of a company's assets that are financed by debt. A higher debt-to-assets ratio indicates a higher level of leverage.

The debt-to-equity ratio measures the amount of debt financing relative to equity financing. A higher debt-to-equity ratio indicates a higher level of leverage. How do you calculate debt ratio on a balance sheet? The debt ratio is calculated by dividing total liabilities by total assets. This ratio is used to measure a company's financial leverage. A higher debt ratio indicates a higher degree of financial leverage and a higher level of risk.