| Commentary |
- Indicator which measures the stability of corporate's asset portfolio, in particular, it measures the dependency on external assets.
- In general, a ratio of less than 100% is considered as a standard ratio. However, such a point of view only reflects creditors' debt recovery concerns. From the perspective of corporate management, it is advantageous to use other's asset as long as there's no short-term pressure of debt repayment. and the targeted rate of return on investment exceeds the deb ratio. Therefore, if creditors want to use this ratio as a standard measure of risk on debt recovery or if the corporate managers want to use this ratio as a standard of procurement, then other ratios such as average borrowing interest rates and ratio of current liabilities to net worth should also be jointly considered (Management analysis of electric works).
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