Long-Term Debt to Total Assets Ratio

Long-Term Debt to Total Assets Ratio

A company’s long-term-debt-to-total-asset ratio measures its leverage and acts as a metric for determining its solvency. The ratio is calculated by dividing total long-term debt (i.e. debt with more than a year to maturity) by total assets. A very high ratio is a potential danger sign for lenders and investors as it means the company may have to liquidate a large proportion of its assets to repay the long-term debt.

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