A4.5 : What is Debt to Asset Ratio in AOTG
Question: What is Debt to Asset Ratio in AOTG?
Answer:
The debt to assets ratio indicates the proportion of a company's assets that are being financed with debt, rather than equity. The ratio is used to determine the financial risk of a business.
A ratio greater than 1 shows that a considerable proportion of assets are being funded with debt, while a low ratio indicates that the bulk of asset funding is coming from equity.
A ratio greater than 1 also indicates that a company may be putting itself at risk of not being able to pay back its debts, which is a particular problem when the business is located in a highly cyclical industry where cash flows can suddenly decline.
To view the deb to asset ratio, login on to AOTG > Financial > Asset & Liabilities
System auto capture ratio by today’s date. Example: -0.073
You can refer Balance Sheet Statement for the figure taken to calculate Deb to Asset Ratio.
- to date filtering
- Assets = DR (Type: Assets) - CR (Type: Assets)
- Liabilities = CR (Type: Liabilities) - DR (Type: Liabilities)
Debt to Asset Ratio = Liabilities / Assets -1567.35 / 21607.47 = -0.073
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