The-Debt-Ratio-Formula

Basically it is a ratio of debt vs assets.  Many lenders view this ratio as a way to determine the company’s / persons financial strength.  A lender will view a person with small debt vs large assets much better then a person with a lot of debt and very little assets.  It is pretty much common sense, for example;

You have 10,000 debt but have 100,000 in assets thus you have a 1/10th Debt Ratio (10%).  A lender has a breaking point such as .43 in FHA / Fannie Mae, once reached you are disqualified from the loan.  So keep debts down as it can disqualify you for an investment opportunity.

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