Total-Debt-to-Total-Assets

The ratio of a company’s total debt to its total assets is a leverage metric. It tells lenders, investors and analysts what proportion of the company’s asset base is funded by creditors as opposed to shareholders. Highly leveraged companies will find access to capital markets more difficult and costly than unlevered companies. Lenders in particular keep a close eye on leverage and will impose total debt and debt service multiple caps into loan covenants. The total debt to total assets ratio is calculated by dividing the company’s total debt load by total assets.