debt ratios calculator

Debt can be either a useful tool or a hidden risk. This debt ratios calculator helps you quickly evaluate common leverage and repayment metrics used by lenders, investors, and financial planners. Enter your numbers below to estimate your debt burden and financial stability.

What this calculator measures

A strong debt review usually looks at more than one number. This calculator gives you four key ratios:

• Debt-to-Income (DTI): Monthly debt payments divided by gross monthly income.
• Debt-to-Asset Ratio: Total liabilities divided by total assets.
• Debt-to-Equity Ratio: Total liabilities divided by total equity.
• Interest Coverage Ratio: EBIT divided by interest expense.

How to use the debt ratios calculator

1) Gather your numbers

Use recent statements and be consistent with time periods. If your debt payment is monthly, income should also be monthly. For assets and liabilities, use balance-sheet style totals (snapshot values).

2) Enter required fields first

Start with monthly debt payments and gross income. Those two fields produce your DTI ratio, often the most important metric for borrowing decisions like mortgages, auto loans, and personal loans.

3) Add optional business or net-worth fields

If you enter liabilities, assets, equity, EBIT, and interest expense, you can get a fuller picture of solvency and repayment capacity.

How to interpret each ratio

Debt-to-Income (DTI)

• Below 36%: Generally healthy.
• 36% to 43%: Caution zone.
• Above 43%: Higher risk for many lenders.

Debt-to-Asset Ratio

• Below 40%: Conservative leverage.
• 40% to 60%: Moderate leverage.
• Above 60%: High leverage, greater balance-sheet risk.

Debt-to-Equity Ratio

• Below 1.0: Lower leverage profile.
• 1.0 to 2.0: Moderate leverage.
• Above 2.0: Higher financial risk in many industries.

Interest Coverage Ratio

• Above 5: Strong ability to service interest.
• 2.5 to 5: Adequate, but monitor closely.
• 1 to 2.5: Weak coverage.
• Below 1: Distress signal (earnings may not cover interest).

Simple example

Suppose your monthly debt payments are $1,500 and gross monthly income is $5,000. Your DTI is 30% ($1,500 / $5,000), which is generally healthy. If liabilities are $100,000 and assets are $250,000, debt-to-asset is 40%, right on the moderate threshold.

Ways to improve your debt ratios

• Pay down high-interest revolving debt first.
• Refinance expensive debt when rates and fees make sense.
• Increase income through side work, pricing updates, or career growth.
• Avoid taking on new debt before major financing applications.
• Build emergency savings to reduce future borrowing pressure.

Important note

Ratios are decision tools, not final verdicts. Lenders and investors also evaluate credit history, cash flow consistency, collateral quality, and economic conditions. Use this calculator as a practical first pass, then pair it with professional advice for major financial decisions.