Debt Ratio Calculator

💰 Financial Input

Enter your financial information for comprehensive analysis

Total Monthly Income ($)

Total Assets ($)

Current Assets ($)

Debt Categories

Housing Debt

Credit Card Debt

Auto Loans

Student Loans

Other Debts

Current Liabilities

📊 Analysis Results

Your financial health assessment

Enter your financial information to see detailed analysis

📈 Debt Breakdown

Visual representation of your debt composition

📊 Ratio Comparison

Compare your ratios against recommended benchmarks

Understanding Debt Ratios

Learn what your ratios mean and how to improve your financial health

Debt ratios are crucial financial metrics that help you understand your financial health and creditworthiness. By analyzing various ratios, you can make informed decisions about borrowing, spending, and financial planning.

Debt-to-Income Ratio

Measures your total monthly debt payments against your gross monthly income. Lenders use this to assess your ability to manage monthly payments.

Debt-to-Equity Ratio

Compares your total debt to your net worth (equity). This ratio shows your leverage and financial stability.

Current Ratio

Measures your ability to pay short-term obligations with current assets. A higher ratio indicates better liquidity.

Quick Ratio

Similar to current ratio but excludes less liquid assets. It's a more conservative measure of liquidity.

Frequently Asked Questions

What is a good debt-to-income ratio?

Generally, a debt-to-income ratio below 36% is considered good, with no more than 28% going toward housing expenses. Ratios above 40% may indicate financial stress.

How often should I calculate my debt ratios?

It's recommended to review your debt ratios quarterly or whenever you experience significant changes in income or debt levels. Regular monitoring helps maintain financial health.

What's the difference between current and quick ratios?

The current ratio includes all current assets, while the quick ratio excludes inventory and other less liquid assets. The quick ratio provides a more conservative view of liquidity.

How can I improve my debt ratios?

Focus on paying down high-interest debt first, increase your income through side jobs or career advancement, avoid taking on new debt, and build an emergency fund.

Financial Health Tips

Debt Management

Pay more than the minimum on high-interest debt to reduce overall interest paid

Consider debt consolidation if you have multiple high-interest debts

Use the debt snowball or avalanche method to systematically pay off debts

Avoid using credit cards for everyday expenses if you carry a balance

Income & Assets

Build multiple income streams to increase financial stability

Maintain 3-6 months of expenses in an emergency fund

Invest in appreciating assets like stocks, real estate, or education

Review and optimize your budget regularly to maximize savings

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