Debt Ratios Calculator
Enter financial values to calculate debt ratios.
Debt Ratios Calculator – Analyze Financial Health and Risk
A Debt Ratios Calculator is a financial tool used to measure how much debt a business or individual has compared to income, assets, or equity. Debt ratios are essential indicators of financial stability, creditworthiness, and risk, and they are widely used by lenders, investors, analysts, and business owners.
By using a debt ratios calculator, you can quickly evaluate whether debt levels are manageable and understand how leveraged a company or individual is.
What Are Debt Ratios?
Debt ratios are financial metrics that compare total debt to income, assets, or equity. They show how much of an entity’s operations are financed through borrowing versus owned resources.
High debt ratios may indicate higher financial risk, while lower ratios often suggest stronger financial health.
What Does a Debt Ratios Calculator Do?
A debt ratios calculator helps calculate and analyze common debt-related metrics, including:
- Debt Ratio
- Debt-to-Equity Ratio
- Debt-to-Income Ratio
- Long-Term Debt Ratio
These ratios provide insight into borrowing levels and the ability to repay obligations.
Common Debt Ratio Formulas
Debt Ratio
Debt Ratio = Total Debt ÷ Total Assets
Shows what portion of assets is financed by debt.
Debt-to-Equity Ratio
Debt-to-Equity Ratio = Total Debt ÷ Total Equity
Measures how much debt is used relative to shareholders’ equity.
Debt-to-Income Ratio (DTI)
Debt-to-Income Ratio = Total Monthly Debt Payments ÷ Gross Monthly Income
Commonly used by lenders to evaluate loan eligibility.
Long-Term Debt Ratio
Long-Term Debt Ratio = Long-Term Debt ÷ (Long-Term Debt + Equity)
Focuses on long-term financial obligations.
Debt Ratios Calculator Example
Given:
- Total debt = 60,000
- Total assets = 150,000
- Total equity = 90,000
Debt Ratio
60,000 ÷ 150,000 = 0.40
→ 40% of assets are financed by debt
Debt-to-Equity Ratio
60,000 ÷ 90,000 = 0.67
→ For every 1 unit of equity, there is 0.67 units of debt
How to Use the Debt Ratios Calculator
- Enter total debt values
- Enter assets, equity, or income as required
- Click Calculate
- View each debt ratio and interpretation
The calculator provides instant results, eliminating manual calculations.
Why Debt Ratios Matter
Debt ratios are important because they:
- Help assess financial risk
- Show borrowing capacity
- Support investment and lending decisions
- Indicate long-term financial sustainability
- Aid in budgeting and planning
Businesses with balanced debt ratios are often more attractive to investors and lenders.
Who Uses a Debt Ratios Calculator?
- Business owners and managers
- Investors and financial analysts
- Accountants and auditors
- Lenders and credit institutions
- Students learning finance and accounting
Interpreting Debt Ratios
- Low debt ratios usually indicate strong financial stability
- Moderate debt ratios may reflect healthy leverage
- High debt ratios can signal financial risk or over-borrowing
Ideal ratios vary by industry and financial goals.
Benefits of Using a Debt Ratios Calculator
- Saves time on financial analysis
- Reduces calculation errors
- Provides clear financial insight
- Helps track debt trends over time
- Supports smarter financial decisions
Final Thoughts
A Debt Ratios Calculator is an essential tool for understanding debt levels and financial health. By calculating ratios such as debt ratio, debt-to-equity ratio, and debt-to-income ratio, you gain valuable insight into financial risk and borrowing capacity.
Whether you are managing a business, applying for credit, or analyzing investments, a debt ratios calculator provides the clarity needed to make informed financial decisions.