Finance people: A quick question...what is an appropriate asset/liability ratio?

[Ralphy Boy]

Originally Posted by Fat Elvis

Thanks. Do you know what is typical in terms of assets (both liquid and non-liquid--or at least not as liquid) vs debt?

it really depends on the context, what are you trying to do?

there generally isn't a clear cut number that says your net worth should exceed your liabilities by 40%, but ideally I think you'd want to have no more than 80% of your assets leveraged at any one time.

Banks generally wouldn't want to exceed 80% of the value of their collateral on a loan, especially in the case of commercial loans. home loans are different because of things like mortgage insurance. but on a commercial loan, if you are borrowing say $60,000 to buy the assets of a business which are mainly furniture & fixtures and inventory or basically just the name of a business and the customer base then a bank wouldn't want to lend near as much as they would on say a piece of commercial property which has a more clearly defined value than equipment which depreciates far more rapidly than a building.

I hope this helps, i really have no idea why your asking and am getting ready for bed so i'll forget this whole conversation by tomorrow. send me a private message if you want to chat more about it tomorrow.