Total Debt (₹) Enter the sum of all liabilities (e.g., loans, payable amounts)

Total Assets (₹) Enter the total value of everything you own (e.g., property, cash, inventory)

Quick Examples:

Moderate Leverage (50%) Low Leverage (20%)

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This calculator is for educational purposes only. It is not intended to provide financial advice. Consult a financial advisor for personalized guidance.

What Is Debt Ratio

Debt Ratio is a number that shows how much of a company's or person's assets are paid for by borrowed money. It compares what you owe to what you own. This helps you see if you have too much debt compared to your property. A lower number usually means you own more of your things outright. A higher number means banks or lenders own a larger part of your assets.

How Debt Ratio Is Calculated

Formula

To find the Debt Ratio, you take the total amount of debt and divide it by the total value of assets. This gives you a decimal number. To turn it into a percentage, you multiply that decimal by 100. For example, if you owe ₹50 and you own ₹100, you divide 50 by 100 to get 0.50. Multiplying by 100 gives you 50%, meaning half of your assets are paid for by debt.

Why Debt Ratio Matters

Knowing your Debt Ratio helps you understand your financial health. It shows how risky your current financial situation might be. This number is often used by banks to decide if they should lend you more money.

Why Managing Debt Is Important for Financial Health

A very high Debt Ratio may suggest that a person or company is struggling to pay for things without borrowing. If the value of assets goes down or interest rates go up, having a lot of debt can become a serious problem. It may be harder to get new loans or handle unexpected costs if too much income is already used to pay off existing debts.

For Loan Approval

Banks and lenders often look at the Debt Ratio to decide if a borrower is safe. They may prefer a lower ratio because it shows the borrower is not relying entirely on borrowed money. A high ratio might make lenders worry that the borrower cannot repay more loans, which may lead to higher interest rates or rejection.

Debt Ratio vs Debt-to-Equity Ratio

Debt Ratio compares debt to total assets, while Debt-to-Equity Ratio compares debt to the owner's share (equity). The Debt Ratio includes all assets, while Debt-to-Equity focuses on what is left after debts are paid. People often mix these up, but they show slightly different views of financial risk.