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Debt-to-Asset Ratio
The debt-to-asset ratio is a solvency ratio that measures if a company is financing its assets more through debt or equity.
- A ratio below 0.5 means the company uses more equity than debt.
- A ratio above 0.5 means the company uses more debt than equity.
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Example: Debt-to-Asset Ratio
Compute the debt-to-asset ratio for Nike, Inc. for 2020.
Practice: Debt-to-Asset Ratio
Aquablu, Inc. reported the following balance sheet at the end of 2020:
Compute the debt-to-asset ratio for 2019 and 2020