Debt-to-Asset Ratio Calculator

The debt-to-asset ratio answers one blunt question: how much of what you own is really owned by your creditors? You get it by dividing total liabilities by total assets. A ratio of 0.45 means 45 cents of every dollar of assets was financed with debt, and the other 55 cents is equity, the part that is genuinely yours.

It works the same way for a household and for a company. Add up everything you owe: mortgage, car loans, credit card balances, student loans. Add up everything you own: home, vehicles, cash, investments. Divide the first by the second. A business reads its two totals straight off the balance sheet, total liabilities over total assets.

What counts as a good number depends on who is reading it. Below about 0.4 is conservative and gives you room to borrow when you need to. Between 0.4 and 0.6 is typical for many established businesses and homeowners with a mortgage. Above 0.6 starts to worry lenders, because a larger slice of your assets is already spoken for and there is less cushion if income drops or asset values fall. A ratio of exactly 1.0 means liabilities equal assets and your equity is zero. Above 1.0 means you owe more than you own, which is negative equity, sometimes called being underwater or technically insolvent.

One caution: the ratio is only as honest as your asset values. If you list your house or your inventory at an optimistic number, the ratio looks healthier than it is. Use conservative, current values. Enter your total liabilities and total assets below to see the ratio, the percentage funded by debt, your equity, and a plain reading of where you stand.