Asset Coverage Ratio Calculator

About this calculator

The asset coverage ratio measures how well a company's tangible assets could repay its debt if the company were liquidated: (Total Assets − Intangible Assets − Current Liabilities excluding short-term debt) ÷ Total Debt. Subtracting intangibles like goodwill and patents keeps the numerator to assets a lender could realistically sell, and subtracting non-debt current liabilities accounts for obligations (like accounts payable) that get paid before debt holders in a wind-down.

Credit analysts and bond rating agencies use this ratio to gauge how much cushion a company's hard assets provide bondholders if things go badly, commercial lenders often write it directly into loan covenants as a minimum threshold the borrower must maintain, and corporate treasury and finance teams track it to stay compliant with those covenants and to benchmark solvency against peers.