Calculate the asset coverage ratio, a solvency ratio that measures how well a company’s tangible assets, after settling non-debt current liabilities, can cover its total debt.

This ratio is commonly used by lenders and bondholders to assess the extent to which a company’s hard (tangible) assets would be available to repay debt obligations in a liquidation scenario, since intangible assets (e.g. goodwill) typically have little to no recovery value and non-debt current liabilities are assumed to be settled first out of current assets. Short-term debt is netted out of current liabilities before subtracting, since it is already captured in total debt and would otherwise be double-counted.

The formula is as follows:

\[\text{Asset Coverage Ratio} = \left[(\text{Total Assets} - \text{Intangible Assets}) - (\text{Total Current Liabilities} - \text{Short Term Debt})\right] / \text{Total Debt}\]

No programming experience? With the Finance Toolkit MCP server, AI assistants such as Claude and ChatGPT can calculate the Asset Coverage Ratio for you. Just ask in plain English.

Calculate the Asset Coverage Ratio in Python

The Asset Coverage Ratio is available in the Ratios module of the open-source Finance Toolkit. Install it with:

pip install financetoolkit -U

Then call get_asset_coverage_ratio as shown below.

from financetoolkit import Toolkit

toolkit = Toolkit(["AAPL", "TSLA"], api_key="FINANCIAL_MODELING_PREP_KEY")

asset_coverage_ratios = toolkit.ratios.get_asset_coverage_ratio()

Parameters

get_asset_coverage_ratio accepts the following parameters:

  • rounding (int, optional): The number of decimals to round the results to. Defaults to 4.
  • growth (bool, optional): Whether to calculate the growth of the ratios. Defaults to False.
  • lag (int | str, optional): The lag to use for the growth calculation. Defaults to 1.
  • standardize (bool, optional): Whether to standardize (Z-Score) the result. When combined with growth=True, standardizes the growth values instead of the raw values. Defaults to False.
  • trailing (int): Defines whether to select a trailing period. E.g. when selecting 4 with quarterly data, the TTM is calculated.
Interest Coverage Ratio Equity Multiplier Debt Service Coverage Ratio Free Cash Flow Yield Net Debt to EBITDA Ratio Cash Flow Coverage Ratio CAPEX Coverage Ratio CAPEX Dividend Coverage Ratio Debt to Capital Ratio Preferred Dividend Coverage Ratio Interest Paid to Interest Expense Ratio Gross Debt to EBITDA Ratio

The Ratios module page introduces the module, and the sidebar lists all of its functions.

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