What do the Debt management ratios reveal?

Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter12: Fainancial Statement Analysis
Section: Chapter Questions
Problem 11DQ
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What do the Debt management ratios reveal?

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Step 1: Definition

Debt management ratio:

Debt management ratio reveals the firm’s ability to repay the long term debts by indicating the percentage of company’s asset that is provided through debt. Higher the ratio, higher will be the risk for the firm’s operation.

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