Red Flags

LT Debt to Average Assets

The debt to asset ratio is a leverage ratio that measures the amount of total assets that are financed by creditors instead of investors. It shows what percentage of assets is funded by borrowing compared with the percentage of resources that are funded by the investors.

In this ratio we look at the long-term debt compared with the average assets, the average amount of assets held during a period.

LT Debt to Average Assets = Long Term Debt ( Total Assets + Total Assets y-1 ) 2