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Article by Sturat Mitchel
Debt Management Ratios: Thermometer to Measure the Financial Health of a Company ? Finance ? Debt Management
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Most of the companies have assets financed through creditors, stockholders and bank debts. A company who is able to manage financial distress with expertise and use the debts as a financial leverage, then in no time the company can break through and show good increase in the profit ratio. The debt management ratio is calculated roughly by the total debt incurred by the company divided by the total assets, tangible and non tangible assets, gives the total assets of the company and this helps to figure out the ratio.
There are different perceptive in viewing this ratio as the investors go through the current financial statement of the company to analyze how their money is put to use and to know the ratio of dividends they would get. The business owner goes through the financial statement to see how far he is ahead or behind his competitors as this ratio is a good yardstick to measure the profit of the company and this gives him a good insight on the plans he should devise to increase the profits and the areas where he has to cut down the company
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