What does the debt ratio of listed companies exceed 50% mean?

The asset-liability ratio has reached 50%, that is to say, debt = owner's equity, that is to say, the company's net assets are zero, and now it is just enough to pay off all the assets of the company.

For listed companies, it is normal for the debt ratio to be between 30% and 60%, but it is better for this figure to change in different cycles. For example, at the end of the bear market, the debt ratio of 40% to 60% is normal. Because the economic situation in the bear market cycle is not good, enterprises often need more funds to tide over the difficulties, but the risk of further sinking at the end of the bear market is reduced, so this debt ratio is relatively safe.

In the bull market cycle, in fact, the debt ratio should be kept at 30%~50%, not too much, because the later stage of the bull market is often a bubble expansion cycle, and a higher debt ratio will put you in an awkward position.

Asset-liability ratio

Asset-liability ratio, also known as debt operation ratio, is used to measure the ability of enterprises to use the funds provided by creditors to conduct business activities and reflect the safety of creditors' loans. By comparing the total liabilities and total assets of the enterprise, it is reflected in the total assets of the enterprise in the form of debt ratio.

Asset-liability ratio is the percentage of total liabilities divided by total assets at the end of the period, that is, the proportional relationship between total liabilities and total assets. The asset-liability ratio reflects how much of the total assets are financed by borrowing, and can also measure the extent to which enterprises protect the interests of creditors in the liquidation process. Asset-liability ratio reflects the proportion of capital provided by creditors to total capital, also called debt operating ratio. Asset-liability ratio = total liabilities/total assets.

It indicates how much of the company's total assets are raised through debt, which is a comprehensive index to evaluate the company's debt level. At the same time, it is also an index to measure the company's ability to use creditors' funds for business activities, and also reflects the security of creditors' loans. If the asset-liability ratio reaches 100% or exceeds 100%, the company has no net assets or is insolvent.