What kind of information does a company's debt ratio provide?

Question

Quizplus · Accepted Answer

A company's debt ratio provides information on what proportion of the company's assets are financed by debt, as opposed to equity. It is calculated by dividing total liabilities by total assets, and the result is expressed as a percentage. A higher debt ratio indicates that a larger portion of a company's assets is financed by debt, and this can indicate a higher risk of insolvency.

What Kind of Information Does a Company's Debt Ratio Provide