Total Debts to Assets:
Provides information about the company’s ability to absorb asset reductions arising from losses without jeopardizing the interest of creditors.
Indicates long-term debt usage.
Long-Term Debt + Owners’ Equity
Debt to Equity:
Indicates how well creditors are protected in case of the company’s insolvency.
Interest Coverage Ratio (Times Interest Earned):
Indicates a company’s capacity to meet interest payments. Uses EBIT (Earnings Before Interest and Taxes)
Long-term Debt to Net Working Capital:
Provides insight into the ability to pay long term debt from current assets after paying current liabilities.
Current Assets – Current Liabilities