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Debt/Equity Ratio

BREAKING DOWN 'Long-Term Debt To Total Assets Ratio'

❶The firms HL and LL are identical except for their leverage ratios and interest rates they pay on debt.

Definition - What is Long-term Debt Ratio?

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What is the 'Long-Term Debt To Total Assets Ratio'

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The calculation for the long-term debt to total assets ratio is long-term debt / total assets = long-term debt to total assets ratio. Example of Long-Term Debt to Assets Ratio. For example, if a company has $, in total assets with $40, in long-term debt, its long-term debt to total assets ratio is $40,/$, = , or 40 percent.

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A company with a long term debt ratio has a pretty high burden of debt. It’s better than having a number above 1, however, because that would mean it had more long term debt than it did assets. A high long term debt ratio means a high risk of not being able to meet its financial obligations.

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Long Term Debt to Total Asset Ratio Analysis By James Wilkinson on July 24, in WikiCFO The Long Term Debt to total asset ratio analysis defined, at the simplest form, an indication of what portion of a company’s total assets is financed from long term debt. Debt to equity ratio is a long term solvency ratio that indicates the soundness of long-term financial policies of a company. It shows the relation between the portion of assets financed by creditors and the portion of assets financed by stockholders.

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Long-term debt ratio is a ratio which compares the amount of long-term debt to the value of total assets on the books of a company. In other words, it gives a sense of financial leverage of a company. Definition: What is the Long Term Debt Ratio? A company . Long-term debt on the balance sheet is important because it represents money that must be repaid by the company. It's also used to understand the company's capital structure including its debt-to-equity ratio.