Fixed Assets To Long-Term Liabilities Ratio
What is fixed assets? Long-term Debt ratio
The ratio of company's ability to repay long-term debt is mainly current ratio. Quick motion Ratio, flow Asset composition ratio, shareholder equity to debt ratio, debt ratio, debt management ratio, property rights ratio, fixed ratio, fixed assets to long-term debt ratio and interest protection multiple.
The ratio of fixed assets to long-term liabilities refers to the ratio relationship between fixed assets (net value) and long-term liabilities of an enterprise.
It is generally believed that this value should be above 100%, otherwise the creditor's rights and interests will be difficult to guarantee.
Take commercial banks as an example, the index is more than 1.
This shows that the net assets of the enterprise are sufficient to guarantee its long-term debt, and the risk of commercial bank loans is relatively small.
A formula for calculating the ratio of fixed assets to long-term liabilities
Fixed assets to long-term liabilities ratio = fixed assets / long-term liabilities * 100%
This ratio can not only indicate how much fixed assets can be secured by long-term loans, but also indicate the extent of security protection for long-term creditors. In general, fixed assets, especially those that have been secured as collateral, should maintain a certain proportion of long-term liabilities as a guarantee for the safety of liabilities. It is generally believed that this ratio should at least exceed 100%, and the greater the protection of long-term creditors' rights and interests. Otherwise, it shows that the company's financial situation is not perfect. At the same time, it also shows that the company's property mortgage has reached the maximum limit and the financing channel must be established. Take A company as an example, its fixed assets are 6 million 90 thousand yuan, and long-term liabilities are 6 million 500 thousand yuan, which is 101.5%.
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