# Total Debt Ratio Calculator

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Instructions:
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Compute the total debt ratio \((TDR)\) with this calculator. You need to provide the total assets \((TA)\) and the total equity \((TE)\) in the form below:

## Total Debt Ratio Calculator

More about this
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total debt ratio calculator
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that will allow to get a step-by-step calculation of the TDR.

The Total Debt ratio corresponds to the ratio between the total debt of a firm and the total assets (this is, the debt-to-assets ratio).

This ratio is a measure of long term liquidity, and it indicates the number many times of debt that can be paid with total assets.

### How do you compute the Total Debt Ratio?

The total debt ratio is computed using the following formula:

\[ TDR = \displaystyle \frac{TA - TE}{TA}\]Therefore, in order to compute the total debt ratio, you need to know the total assets and total equity of a firm.

### Example: Calculation of total debt ratio

**Question**: Assume that a firm has total assets accounting for $250,000, out of which the total equity is $185,000.
Compute the total debt ratio for this firm.

Solution:

This is the information we have been provided with:

• The total assets are \(TA = 250000\) and the total equity is \(TE = 185000\).

Hence, the total debt ratio \(TDR\) is computed using the following formula:

\[ \begin{array}{ccl} TDR & = & \displaystyle \frac{\text{Total Assets - Total Equity}}{\text{Total Assets}} \\\\ \\\\ & = & \displaystyle \frac{250000 - 185000}{250000} \\\\ \\\\ & = & 0.26 \end{array} \]Therefore, the total debt ratio, for the given total assets of \(TA = 250000\), and total equity of \(TE = 185000\), is \(TDR = 0.26 \). This means that firm's total debt is \(0.26\) times its total assets.

### Financial Ratios Calculators

The total debt ratio is a commonly used financial ratio. Other financial ratio calculators are the current ratio , quick ratio , inventory turnover calculators.