Plain definition
The debt-to-assets ratio divides a defined debt balance by total assets at a stated date. It shows one view of leverage, but it does not tell whether assets are liquid, accurately valued, or available to support debt.
Illustrative example
Monetary examples use Saudi riyals (SAR). The same principles apply in other currencies.
Defined debt is and total assets are , giving 50%. Management notes that of assets are specialised equipment with uncertain resale value, so it reviews maturity and cash generation rather than relying on the percentage alone.
Why it matters
Debt relative to assets can look conservative while the assets cannot generate cash or be sold. Reading it with asset quality and maturity protects the company from a false sense of repayment capacity.
Practical consequence
State the debt definition, asset basis, date, and any revaluation or restriction. Use the ratio with cash-flow and covenant analysis, not as a standalone lending decision.