hi sir, I would like to ask about the interpretation of debt ratio. for example, a debt ratio of 30% is tht means 30% of the assets are financed by debt, while the 70% of the asset is financed by equity?
Is it interprete in this way?
besides, in what situation, we will use debt ratio rather than debt-to-equity ratio?
thanks
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debt ratio
6y ago#1Both the debt ratio and the debt to equity ratio are measures of the gearing. The relevance of gearing is explained in full in my free lectures.
Ya I do understand that both debt ratio & debt to equity ratio are used to measure gearing.
I am just wondering the interpretation of debt ratio. for example, a debt ratio of 30% is tht means 30% of the assets are financed by debt, while the 70% of the asset is financed by equity? <<< is it interpret in this way?
Thankss
6y ago#3Yes, although it is better to say that 30% of the long-term finance is raised from debt and 70% is financed from equity :-)
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