What is the ideal ratio for total asset to debt ?
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A ratio of 0.5 indicates that half of the total assets of the company are financed by the liabilities. In other words, the debt is only 50% of the total assets. A lower value of the ratio is better than a higher number. A lower ratio signals a stable company with a lower proportion of debt
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Total Assets to Debt ratio
= Total Assets ÷ Long Term Debts
This ratio indicates how much of total assets have been financed by long-term debts.
The higher ratio indicates that assets have been mainly financed by owners funds and less of long-term debts.
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