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Investopedia has a definition about Debt ratio, I do not understand how come Debt ratio can be higher than 1. Because it means that equity is negative (because Total Assets=Debt+Equity).

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Phil Nguyen
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1 Answers1

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Equity can be negative when a firm accumulates losses and liabilities exceed the number of assets. In that case debt ratio can be bigger than 1.

csilvia
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