Ratios: Debt to Asset Ratio definitions Flashcards
Ratios: Debt to Asset Ratio definitions
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Debt to Assets Ratio
A solvency measure showing the proportion of a company's assets financed by liabilities, calculated as total liabilities divided by total assets. Solvency Ratio
A financial metric used to assess a company's ability to meet its long-term obligations and overall financial stability. Total Liabilities
The sum of all financial obligations a company owes to outside parties, including loans and accounts payable. Total Assets
The complete value of everything a company owns, including cash, inventory, property, and equipment. Equity
The residual interest in the assets of a company after deducting liabilities, representing ownership value. Financial Risk
The potential for a company to face difficulties in meeting debt obligations, often increased by higher debt ratios. Default
A situation where a company fails to meet its debt repayment obligations, potentially leading to legal or financial consequences. Debt Payments
Regular payments a company must make to service its outstanding liabilities, including principal and interest. Interest
The cost incurred by a company for borrowing funds, typically paid periodically to lenders. Dividend
A distribution of a portion of a company's earnings to its shareholders, not a mandatory payment like debt interest. Financial Structure
The composition of a company's funding sources, specifically the mix of debt and equity used to finance assets. Liabilities
Obligations or debts a company must settle in the future, arising from past transactions or events. Bank Loan
A sum of money borrowed from a financial institution, requiring repayment with interest over a specified period.
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