what is a good debt to asset ratio

The debt-to-asset ratio is a financial metric that measures a companys total debt as a percentage of its total assets. It is used by creditors, lenders, and investors to evaluate a company's risk level and ability to repay its debts. A debt ratio of significantly less than 1 is considered good, indicating that the company uses only adequate leverage to acquire assets. Generally speaking, a debt-to-equity or debt-to-assets ratio below 1.0 would be seen as relatively safe, whereas ratios of 2.0 or higher would be considered risky. However, what counts as a good debt ratio will depend on the nature of the business and its industry. For example, the real estate industry uses leverage to fund most of its projects, so real estate companies typically have a very high debt-to-asset ratio, but this doesn’t necessarily mean that it’s a bad business. It is important to use the debt-to-asset ratio in conjunction with other measures of financial health to get a more complete picture of a company's financial situation.