Debt Ratio

Thedebt ratiois premeditated by separating total debt by total assets. We can also use numerous other ways to communicate the degree to which firms use debt, such as the debt-equity ratio and the evenhandedness multiplier (that is, total assets alienated by equity). The debt ratios for the Timberland Company for 2000 were

And all of this information propose that while Timberland carries some debt, its assets and impartiality are large sufficient that it remainder in a strong financial position. Debt ratios supply information about the relation protection for creditors from bankruptcy and the aptitude of firm to obtain extra financing for potentially beautiful assumption opportunities. However, debt is standard on the balance sheet basically as the unpaid balance. Consequently, no modification is made for the present level of attention rates or risk. Thus, the accounting value of debt may differ considerably from its market value. Some forms of debt may not come into view on the balance sheet at all, such as retirement fund liabilities, charter obligations, or assurance for supplementary debt.