Debt Ratio = Total Debt ÷ Total Assets
Total Debt = Short-Term Debt + Long-Term Debt
Total Assets = All assets owned by the business
Divide total debt by total assets
Multiply the result by 100 to get a percentage
Formula: Debt Ratio = (Total Debt / Total Assets) × 100
Example: If Total Debt is 50,000 and Total Assets are 100,000, Debt Ratio = 0.5 or 50%