Blog · Finance metrics and formulas · Finance and FP&A teams
Calculate long-term debt as a share of total assets from a balance-sheet export and maturity schedule. See how current maturities, leases and reclassification affect the result without changing total borrowing.
The long term debt to asset ratio measures defined long-term borrowing relative to total assets at a reporting date. In the calculation below, long-term debt means noncurrent interest-bearing borrowings, excluding current maturities and all lease liabilities. That definition makes maturity reclassification visible, so a falling ratio must be checked before it is described as debt reduction.
Long-term debt to assets = Defined long-term debt / Total assets
Express the result as a percentage. Use closing balances from the same entity, currency and date; do not divide debt by annual revenue or substitute only fixed assets for total assets.
The SEC's guide to financial statements distinguishes current liabilities from long-term obligations and describes the balance sheet as a snapshot. This is why the reporting classification matters. Debt can remain outstanding while moving between current and noncurrent presentation.
These scopes answer different questions:
| Scope | Numerator | Question answered |
|---|---|---|
| Noncurrent borrowing | Borrowings classified as noncurrent | How much of the asset base is matched by noncurrent borrowing? |
| Debt originally issued long term | Noncurrent borrowing plus its current maturities | How much outstanding term borrowing remains relative to assets? |
| Total borrowing | The above plus short-term borrowing | How much borrowing of all maturities is outstanding relative to assets? |
The main example uses the first scope. For the wider comparison, see debt to equity versus debt to assets. For the underlying classification question, use the separate guide to long-term debt.
Start with the approved balance sheet and debt schedule for the same close. Keep an account description, entity, reporting date, currency, carrying amount and current/noncurrent classification. Identify bank loans, bonds and revolving borrowings separately from lease liabilities and operating accruals.
Use carrying values consistently when the denominator is a financial-statement carrying-value asset total. If the debt schedule lists face amounts, reconcile discounts, premiums and other relevant carrying-value adjustments before using it. A repayment calendar and the balance-sheet debt balance need not be identical.
Lease treatment requires its own decision. FASB's Topic 842 update explains that lessees recognize lease assets and liabilities while distinguishing finance and operating leases. Keeping those rows visible prevents a lease liability from being included simply because an export labels it long term.
This example excludes both lease categories from borrowing. It keeps the associated right-of-use assets in reported total assets. An adjusted measure that removes those assets would need a different denominator and a clear reconciliation.
An illustrative US equipment supplier supplies the following balances at September 30, 2026. All amounts are USD.
| Asset row | Closing balance (USD) |
|---|---|
| Current assets | 1,200,000 |
| Net property and equipment | 1,500,000 |
| Right-of-use assets | 300,000 |
| Total assets | 3,000,000 |
| Funding row | Closing balance (USD) | Main numerator treatment |
|---|---|---|
| Noncurrent term borrowing | 1,000,000 | Include |
| Current maturities of term borrowing | 200,000 | Exclude |
| Short-term revolving borrowing | 150,000 | Exclude |
| Current finance lease liabilities | 20,000 | Exclude |
| Noncurrent finance lease liabilities | 80,000 | Exclude |
| Current operating lease liabilities | 40,000 | Exclude |
| Noncurrent operating lease liabilities | 160,000 | Exclude |
| Accounts payable | 350,000 | Exclude |
| Accrued expenses | 200,000 | Exclude |
| Other nonborrowed liabilities | 100,000 | Exclude |
| Total liabilities | 2,300,000 | |
| Shareholders' equity | 700,000 | |
| Total liabilities and equity | 3,000,000 |
The same rows support the main ratio and the scope bridge:
| Step | Calculation | Result: amounts (USD), ratios as shown |
|---|---|---|
| Main noncurrent borrowing ratio | 1,000,000 / 3,000,000 | 33.3% |
| Outstanding term borrowing | 1,000,000 + 200,000 | 1,200,000 |
| Term borrowing including current maturities / assets | 1,200,000 / 3,000,000 | 40.0% |
| Total borrowing | 1,000,000 + 200,000 + 150,000 | 1,350,000 |
| Total borrowing / assets | 1,350,000 / 3,000,000 | 45.0% |
Percentages are rounded to one decimal place. The differences arise entirely from the debt scope; no asset balance changes between calculations.
If policy includes noncurrent finance leases, add $80,000 to the main numerator: $1,080,000 divided by $3,000,000 gives 36.0%. Including noncurrent operating leases as well gives $1,240,000 divided by $3,000,000, or 41.3%. Those are alternative definitions to disclose, not interchangeable answers.
First, asset rows sum to $3,000,000. Liabilities of $2,300,000 plus equity of $700,000 equal that same total. This tests the completeness of the statement, although it does not by itself prove the borrowing classification.
Next, rebuild total borrowing from its components: $1,000,000 noncurrent + $200,000 current maturities + $150,000 short-term = $1,350,000. Reconcile that amount to the debt schedule, without adding a total-term-debt subtotal to its components.
Finally, account for excluded liabilities. Lease liabilities sum to $300,000, and accounts payable, accruals and other nonborrowed liabilities sum to $650,000. Adding these to borrowing of $1,350,000 gives total liabilities of $2,300,000. Every liability row has a destination.
Across entities, calculate a group ratio from reconciled group balances after consolidation adjustments. An average of entity percentages gives small entities the same weight as large ones and generally does not reproduce the group figure.
Suppose the only change at the next close is that $100,000 of term borrowing moves into the current portion. Assets and total borrowing remain unchanged. This isolates classification from operating performance.
| Measure | Original close: amounts (USD), ratios as shown | After reclassification: amounts (USD), ratios as shown |
|---|---|---|
| Noncurrent borrowing (USD) | 1,000,000 | 900,000 |
| Current maturities (USD) | 200,000 | 300,000 |
| Short-term revolving borrowing (USD) | 150,000 | 150,000 |
| Total borrowing (USD) | 1,350,000 | 1,350,000 |
| Total assets (USD) | 3,000,000 | 3,000,000 |
| Noncurrent borrowing / assets | 33.3% | 30.0% |
The main ratio falls by 3.3 percentage points, rounded from the unrounded calculations. The total borrowing ratio stays at 45.0%. The maturity mix has shortened; the company has not reduced borrowing.
Treasury owns the debt and maturity mapping, the controller owns the statement tie, and FP&A explains movements. A useful review asks whether the ratio moved because of repayment, reclassification, new assets, depreciation or an acquisition. For a different capital-base question, use long-term debt to equity.
Bring a sample of your own closing balance sheet and debt maturity schedule, keeping current portions and lease categories separate. Covirage maps the columns, its tools compute and check the ratios against your supplied classifications, and the external AI model explains the movements with every figure traced to its rows. Create a free Covirage account, then set up your business and bring your file; creating the account takes about a minute.
See FP&A reporting with Covirage for the broader reporting use case.
It depends on the stated scope. A noncurrent-debt measure excludes the current portion. A measure of outstanding debt originally issued long term includes it. Label the version explicitly, and retain the current portion as a separate row so the two can be reconciled.
A lower ratio can reflect repayment, asset growth or movement of debt into current liabilities. Only the first necessarily means less borrowing. Review the maturity schedule and asset movements before calling a decline an improvement in financing risk.
Use a documented policy. A borrowing-only measure may exclude both lease categories; another policy may include finance leases or both categories. Keep the current and noncurrent components visible and apply the same treatment across companies and reporting dates.
No. Dividing debt by total assets measures a balance-sheet relationship. It does not identify collateral, lien priority, borrowing-base eligibility or proceeds originally used to buy particular assets. Read the financing agreement and collateral schedule for those questions.