What the debt-to-assets ratio tells you
Every asset on a balance sheet is financed either by liabilities or by shareholders’ equity. The debt-to-assets ratio shows the liabilities’ share, which also tells you the owners’ share. This version counts all liabilities, current and long-term: borrowings, amounts owed to suppliers, taxes due and other obligations. Total assets are everything the business owns on the same date.
A result of 60.0% means liabilities finance 60% of total assets and shareholders’ equity finances the other 40%. A result above 100% means liabilities are larger than assets, so equity is negative.
Reading a high or low result
What is normal varies by industry and business model. Businesses that hold a lot of long-lived assets often finance a larger share of them with debt.
- A higher ratio means creditors have financed more of the assets. Borrowing can lift returns to shareholders, but more claims rank ahead of them, and any interest-bearing part brings fixed payments that continue when profits fall.
- A lower ratio means owners have financed more of the assets. That leaves more room to absorb losses before liabilities exceed assets, although it may also mean the business is not using borrowing that could fund growth.
The ratio is most useful when you compare it with the same business in earlier periods, or with similar businesses that report on the same basis.
What counts as a good debt-to-assets ratio
No single figure suits every business, but you can see where a result sits among real companies. At the end of 2025, the median debt-to-assets ratio of 3,753 companies listed in the US was 52.2%. The middle half of them fell between 29.9% and 73.1%.
Industry matters more than any rule of thumb. The median was 79.8% in personal and repair services, but 32.1% in pharmaceuticals and biotech.
- All industries 3,753 companies52.2% 29.9%–73.1%
- Personal and repair services 25 companies79.8% 64.2%–94.3%
- Airlines and air freight 19 companies79.8% 65.6%–102.2%
- Restaurants 47 companies76.3% 58.5%–100.4%
- Semiconductors and electronic components 123 companies37.2% 18.8%–54.3%
- Mining 63 companies34.8% 12.1%–49.8%
- Pharmaceuticals and biotech 612 companies32.1% 15.3%–64.4%
Measured from US GAAP financial statements filed with the SEC: balance sheets dated closest to 31 December 2025. Banks, insurers and brokers are left out: their revenue, costs and borrowing work differently from other businesses. These are public companies, so smaller private businesses can look different. Compare with businesses like yours, and with your own earlier periods.
To see one listed company’s debt-to-assets ratio for each of its last five years, worked out from its filings, use the company ratio lookup.
What the ratio does not show
- It treats every liability alike. A supplier bill due next month counts the same as a loan due in ten years, and a liability that carries no interest counts the same as one that does. Some analysts count only interest-bearing debt, which gives a lower figure.
- It uses book values. Most assets are recorded at cost less depreciation rather than at what they would sell for, and resources a business builds itself, such as a brand, usually do not appear at all.
- It does not show whether the business can pay its interest. The interest coverage ratio compares operating income with interest expense.
- It is a snapshot of one date.
Common mistakes
- Counting only long-term debt and leaving out current liabilities. This version includes both.
- Comparing your figure with one that counts interest-bearing debt only, without checking the definition.
- Confusing it with debt-to-equity. A debt-to-assets ratio of 50% corresponds to a debt-to-equity ratio of 1.00, because liabilities and equity are then equal.
- Taking liabilities and assets from different balance sheet dates.
Related measures
The debt-to-equity ratio divides the same liabilities by shareholders’ equity instead of total assets, so while equity is positive the two always move in the same direction. Debt-to-equity vs debt-to-assets explains when each is easier to read. The current ratio narrows the view to the short term, comparing current assets with the liabilities due within a year.