Total Debt Service Ratio

What is a total debt service ratio?

Total Debt Service Ratio Definition: A debt ratio measures total debt to total assets, usually presented as a percentage or decimal. It indicates how well a company or individual can pay off their debts. If a ratio is more significant than “1”, the organization funds all or most of its assets with debt, meaning its overall ownership amount exceeds what they own.

If the debt service ratio is below “1”, this indicates that a company has equity, as there are more assets and liabilities. The total debt service ratio is calculated by dividing the total debt by the total assets.

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