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How can you calculate to what extent a public company is financed by debt?


How can you calculate to what extent a public company is financed by debt?

Thanks in advance

You get their annual report, you look at the balance sheet, and you read the liabilities section.

You go to the company's annual report, look at its balance sheet, search for Total Liabilities, Total Assets and Total Equity. A company is made up of its Total Assets, which is financed by debt (Total Liabilities) and shareholders (Total Equity). Whatever portion of the Total Assets which is not financed by the shareholders (Total Equity), is financed by debt (Total Liabilities). Therefore to calculate, you can use the Debt Ratio which is Total Liabilities divided by Total Assets, to give you the proportion of the company (Total Assets), which is financed by debt (Total Liabilities).

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