Debt Ratios Calculator
This calculator will find solutions for up to three measures of the debt of a business or organization - debt ratio, debt equity ratio, and times interest earned ratio. The calculator can calculate one or two sets of data points, and will only give results for those ratios that can be calculated based on the inputs provided by the user.
- If you are analyzing one company over a single reporting period, fill in the known data points in column A and press calculate - the results will display below.
- If you are analyzing two companies or a single company over two reporting periods, use both column A (primary) and B (secondary). For each data point and ratio that has a value in both columns, the change expressed as a percent increase or decrease will also be calculated.
The significant figures drop select box only determines rounding for the ratios themselves. Percent changes are always calculated to four significant figures.
Calculations Used in this Calculator
- Debt Ratio = (current liabilities + long-term liabilities) ÷ (current assets + long-term assets)
- Debt Equity Ratio = (current liabilities + long-term liabilities) ÷ equity
- Times Interest Earned Ratio (TIER) = (net income + interest + taxes) ÷ taxes
- Current Liabilities
- Short term liabilities that are due now or will become due within twelve months. This includes day to day operating expenses, supplies and materials, loans coming due within the current year, etc...
- Long-term Liabilities
- Liabilities that will not become due for more than twelve months.
- Current Assets
- Short term assets that, either immediately or within twelve months, can be readily converted into cash as profit, to pay debt or current expenses.
- Long-term Assets
- Sometimes known as "fixed assets" or "property, plant and equipment" (PP&E), this accounts for real estate, equipment, fixtures, furniture, motor vehicles, etc... Unlike current assets, where some very low risk investments are considered cash equivalents once they are close to maturity, long-term assets do not include any securities regardless of risk factor.
- The amount of funds contributed by the owners/ shareholders plus the retained earnings or losses, referred to as shareholder's equity.
- Net Income
- Gross income minus taxes and interest.
- Interest payments made towards loans, mortagages, outstanding bonds.
- Total combined tax liabilities for a given reporting period - including income, capital gains, property, sales, excise, and any speciality taxes paid to a federal, state, or local government.
- Debt Ratio
- Measures the portion of a company's finances that are funded through debt.
- Debt Equity Ratio
- Measures the amount of company’s finance through debt. By using shareholder’s equity, it is possible to see what creditors, lenders, etc, that hold the debt. Not what the shareholder’s have put into the company. This is another way of analyzing a company’s financing through debt.
- Times Interest Earned Ratio
- Measures a company's ability to make interest payments, similar to the "debt to income" ratio sometimes used in consumer credit scoring.
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