Definition of Long Term Debt to Asset Ratio

Definition of Long Term Debt to Asset Ratio

Definition: What is Long Term Debt to Asset Ratio?

Long term Debt to Asset ratio is the coverage ratio which is used to measure the leverage of the company by comparing the total debt to assets.

Definition of Long Term Debt to Asset Ratio

There are two types of liabilities on the balance sheet of the companies which are short term and long term liabilities. Short term liability due within one year whereas long term liability due for more than 1 year.

If the result of this ratio is high then the company is more leveraged and the company owns less of the assets on the balance sheet.

By raising the debt or equity capital a company can build the assets.

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