What are debt ratios?

Debt ratiOS are financial metrics used to evaluate a company's leverage and financial health by comparing its total debt to its total assets or equity. Common debt ratiOS include the debt-to-equity ratio, which measures the proportion of debt relative to shareholders' equity, and the debt-to-assets ratio, indicating the percentage of a company's assets financed by debt. These ratiOS help investors and analysts assess the risk associated with a company's capital structure and its ability to meet financial obligations. High debt ratiOS may signal increased financial risk, while lower ratiOS typically suggest a more stable financial position.