- Enter the required financial data in the input fields below.
- Click "Calculate" to calculate a wide range of debt and financial ratios.
- Use the "Clear" button to reset all input fields.
- Click "Copy" to copy the calculated ratios to the clipboard for further analysis or reporting.
Debt Ratio:
Equity Ratio:
Interest Coverage Ratio:
Debt to EBITDA Ratio:
Current Ratio:
Quick Ratio:
Tax Burden Ratio:
Preferred Dividend Coverage Ratio:
Total Debt to Capital Ratio:
Long-Term Debt to Equity Ratio:
Short-Term Debt to Equity Ratio:
What is Debt Ratios?
Debt ratios, also known as leverage ratios or debt-to-equity ratios, are financial metrics used to evaluate a company’s level of debt in relation to its equity or other financial resources. These ratios are essential for assessing a company’s financial health, risk profile, and its ability to meet its debt obligations. Debt ratios are commonly used by investors, creditors, and analysts to make informed decisions about a company’s creditworthiness and financial stability.
All Formulae Related to Debt Ratios
- Debt-to-Equity Ratio (D/E Ratio):
- Formula: D/E Ratio = Total Debt / Shareholders’ Equity
- Debt Ratio (Total Debt to Total Assets):
- Formula: Debt Ratio = Total Debt / Total Assets
- Debt-to-Capital Ratio:
- Formula: Debt-to-Capital Ratio = Total Debt / (Total Debt + Shareholders’ Equity)
- Interest Coverage Ratio (ICR):
- Formula: ICR = Earnings Before Interest and Taxes (EBIT) / Interest Expense
- Debt Service Coverage Ratio (DSCR):
- Formula: DSCR = Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) / Total Debt Service (Interest + Principal Payments)
- Long-Term Debt Ratio:
- Formula: Long-Term Debt Ratio = Long-Term Debt / (Long-Term Debt + Shareholders’ Equity)
- Debt-to-EBITDA Ratio:
- Formula: Debt-to-EBITDA Ratio = Total Debt / Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA)
- Debt-to-Income Ratio:
- Formula: Debt-to-Income Ratio = Total Debt / Annual Income
- Debt-to-Cash Flow Ratio:
- Formula: Debt-to-Cash Flow Ratio = Total Debt / Operating Cash Flow
- Debt-to-EBIT Ratio:
- Formula: Debt-to-EBIT Ratio = Total Debt / Earnings Before Interest and Taxes (EBIT)
- Debt-to-Total Capitalization Ratio:
- Formula: Debt-to-Total Capitalization Ratio = Total Debt / (Total Debt + Preferred Stock + Common Equity)
Applications of Debt Ratios Calculator in Various Fields
Debt ratios calculators play a crucial role in various fields and are used by individuals, businesses, and financial professionals to assess a company’s financial health, risk, and leverage. Here are some applications of debt ratios calculators in different fields:
- Investment Analysis:
- Investors use debt ratios to evaluate a company’s financial stability and risk profile when considering potential investments in stocks or bonds.
- These ratios help investors assess the creditworthiness of a company and make informed decisions about allocating their capital.
- Credit Analysis and Lending:
- Banks and financial institutions use debt ratios to evaluate the creditworthiness of borrowers.
- Lenders assess a borrower’s ability to service debt and determine appropriate lending terms, including interest rates and loan amounts.
- Corporate Finance and Capital Structure Management:
- Corporations use debt ratios to manage their capital structure effectively.
- Finance teams use these ratios to determine the optimal mix of debt and equity financing to minimize the cost of capital and maximize shareholder value.
- Risk Management:
- Risk managers assess the financial risk associated with a company’s debt levels using debt ratios.
- They use this information to implement risk mitigation strategies and manage exposure to market fluctuations.
- Financial Planning and Budgeting:
- Individuals and households use debt ratios to assess their own financial health and manage personal debt.
- It helps individuals make informed decisions about borrowing, saving, and budgeting.
Benefits of Using the Debt Ratios Calculator
Using a debt ratios calculator offers several benefits to individuals, businesses, and financial professionals, as it provides a systematic and efficient way to assess a company’s financial leverage and risk. Here are the key advantages of using a debt ratios calculator:
- Objective Assessment: Debt ratios provide an objective and quantitative assessment of a company’s financial health and leverage, making it easier to evaluate its financial stability.
- Quick and Efficient: Calculating debt ratios using a calculator is much faster and more accurate than performing manual calculations, especially for complex financial statements.
- Consistency: Calculators ensure consistency in calculations, reducing the risk of errors that can occur when manually computing ratios from financial statements.
- Accessibility: Debt ratios calculators are readily available online and through various financial software tools, making them accessible to individuals and professionals alike.
- Informed Decision-Making: Users can make informed decisions regarding investments, lending, creditworthiness, and financial planning based on the insights provided by debt ratios.
References
- “Beyond Rule of Thumbs: Unveiling the Nuances of Debt Ratios in Corporate Financial Analysis” by Journal of Applied Corporate Finance
- “From Creditworthiness to Loan Decisions: Using Debt Ratios in Personal Finance Management” by Journal of Consumer Affairs
Last Updated : 27 February, 2024
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Sandeep Bhandari holds a Bachelor of Engineering in Computers from Thapar University (2006). He has 20 years of experience in the technology field. He has a keen interest in various technical fields, including database systems, computer networks, and programming. You can read more about him on his bio page.
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