The debt-to-total assets ratio is primarily a measure of

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The Debt to Total Assets ratio is measure of Total debt to Total Assets i.e How much company has the debt liability from total assets, i.e ratio of assets procured from the Debts

Debts is a liability which is compulsorily need to paid off on due time with interest or without interest

Equity is a Owners investment which may be paid when earnings are available in the form of dividends or share of investment in case of liquidation or winding up

It help the investors and creditors and lenders to understand the repayment capability by analysing the repayments such as Principle and interest or EMI to be made compulsorily from the income so that the creditors or lenders can able to analyse themselves, how much debt can be provided to the company in the form of loans and debts and also rate of interest to be charged based on liquidity and security of the Company

Hope this helped ! Let me know in case of any queries.

ekkarill92 answered 2 years ago

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