Debt to assets
How much of the company's property is financed with borrowed money.
Formula
\frac{\text{Total debt}}{\text{Total assets}}The numerator is interest-bearing debt, not all liabilities: trade payables are not debt and carry no interest.
How to read the number
A measure of whose share of the business is larger, creditors' or shareholders'. A rising value at flat profit means the growth was bought with debt.
When the metric lies
Assets are carried at book value, which can drift far from market value: for a company with old fixed assets the denominator is understated and leverage looks worse than it is.
Where it is used
The metric is calculated across every security in the catalogue and appears on the instrument card, in the multiples table and in the screener.
Also known as: debt to assets