The debt/asset ratio shows how great a proportion of a company's assets are financed through debt. If the ratio is less than one, than the majority of the company's assets are financed using equity. If the ratio is greater than one, the majority of the company's assets are financed using debt. Highly leveraged companies have high debt/asset ratios and could be in danger if creditors start to demand increased payment on debt. The debt/asset ratio equals total liabilities divided by total assets.