Total Debt Ratio Calculator

Instructions: 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 Assets $$(TA)$$ =
Total Equity $$(TE)$$ =

Total Debt Ratio Calculator

More about this total debt ratio calculator 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.