Debt ratio calculator
Debt ratio, debt-to-equity and current ratio from a balance sheet.
About this calculator
This debt ratio calculator measures how much of a company, or a household, is financed by debt. Enter total assets and total liabilities from the balance sheet.
It also gives the debt-to-equity and equity ratios, and the current ratio and working capital if you add current assets and liabilities.
How it works
Debt ratio = total liabilities ÷ total assets. Equity is assets minus liabilities, so debt-to-equity = liabilities ÷ equity. The current ratio, current assets ÷ current liabilities, shows whether short-term debts are covered.
Last reviewed:
Worked example
- Total assets: $500,000
- Total liabilities: $300,000
Debt ratio: 0.6 (moderate)
Common questions
What is a good debt ratio?
It depends on the industry, but many analysts see a ratio below about 0.5 as conservative and above 0.6 as highly leveraged. A ratio above 1 means liabilities exceed assets.
What is the difference between debt ratio and debt-to-equity?
Debt ratio compares liabilities with total assets, while debt-to-equity compares them with the owners' equity. A debt ratio of 0.6 equals a debt-to-equity ratio of 1.5.
What is the current ratio?
Current assets ÷ current liabilities. Above 1 means the bills due within a year are covered by assets that can become cash within a year.
Sources and further reading
The story behind it
Where the idea came from: Double-entry bookkeeping, the system behind every balance sheet, was first described in print by Luca Pacioli in Venice in 1494.
Because assets always equal liabilities plus equity, the debt ratio shows how much of a business is paid for with borrowed money. Lenders and investors check it to judge how risky the business is.
Why you can trust this calculator
- It runs in your browser. Nothing you type into it is sent anywhere.
- The method is explained on this page, so you can check it yourself.
- Free to use, with no sign-up.
- Results are estimates, not financial advice.
- Spotted a mistake? Tell us and we'll look into it.
After 15 years as a mathematics educator, I built CalculStore to give students, teachers, professionals and anyone working with numbers simple, reliable tools.
Meet the founder