Net Worth
Debt-to-asset ratio
Expresses leverage as a proportion. 0.48 means creditors have a claim on roughly half of everything owned.
The Formula
Debt Ratio = Liabilities / Assets
Expresses leverage as a proportion. 0.48 means creditors have a claim on roughly half of everything owned.
| Symbol | Meaning | Unit | Notes |
|---|---|---|---|
| L / A | Debt ratio | decimal | Falls as debt is repaid or assets appreciate. Above 1.0 means liabilities exceed assets. |
What Each Symbol Means
L / Adecimal
Debt ratio
Falls as debt is repaid or assets appreciate. Above 1.0 means liabilities exceed assets.
See It Worked With Real Numbers
A formula on its own does not tell you which number goes where. The how to calculate net worth page applies this equation to a concrete case, shows every intermediate step, and names the mistakes that produce a wrong answer even when the algebra is right.
Where This Formula Appears
This equation is the working core of How To Calculate Net Worth, filed under Finance. Every number the guide produces comes from substituting into this one line.