Debt Ratio And Total Debt

1258 Words Apr 21st, 2016 6 Pages
Debt Ratio also known as the total debt ratio which is (total assets-total equity)/(total assets). The Debt Ratio looks at all debts to all creditors. Debt to Equity Ratio is the total debt/ total equity. This looks at the long-term solvency measure to look at long-term ability for the firm to pay its bills. The debt to equity ratio is calculated by dividing total liabilities by total equity. The debt to equity ratio is considered a balance sheet ratio because all of the elements are reported on the balance sheet. The debt to equity ratio for 2010 was 1.6455% and for 2009 1.289%. A debt to equity ratio of 1 would mean that investors and creditors have an equal stake in the business assets. This means that there may be a lack of performance for the reason why there ratio is close to 1.
The total asset turnover ratio calculates net sales as a percentage of assets to show how many sales are generated from each dollar of company assets. The total asset turnover ratio is a general efficiency ratio that measures how efficiently a company uses all of its assets. This gives investors and creditors an idea of how a company is managed and uses its assets to produce products and sales. Sometimes investors also want to see how companies use more specific assets like fixed assets and current assets.
Days ' sales in inventory is 365/inventory turnover. It looks at how long(days) the inventory will sit until it is sold. But you must first calculate the inventory turnover which is the…
Open Document