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Debt-asset ratio
A financial ratio that measures the percentage of a farm operator's assets that are financed by debt. For example, a ratio of 0.4 means that for every $100 of assets the operator has $40 of debt. The ratio indicates to a lender the degree of security of a loan. Higher values indicate greater risk. Although a safe or acceptable level varies greatly by enterprise, a debt-asset ratio in excess of 0.4 may indicate financial stress. A ratio of 0 means that the operator owes no debt; a ratio greater than 1 means that the borrower's debts exceed the value of assets, indicating the insolvency of the farm business.
- Part of Speech: noun
- Synonym(s):
- Blossary:
- Industry/Domain: Agriculture
- Category: Agricultural programs & laws
- Company: USDA
- Product:
- Acronym-Abbreviation:
Other Languages:
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