Debt to equity and debt to assets

CFA Level II FRA
#1

Hi - when I’m calculating ratios it seems that sometimes debt means “long-term debt” only and other times it means “total liabilities”.

For instance D/E is market value of equity / market value of debt - which is long-term debt only.

I just did a question about the change in debt to asset ratio after converting an operating lease to a finance lease, and debt was total liabilities.

Is there a simple rule here I have missed?

Thanks

#2

depends on the balance sheet data given by the question, if the data is comprehensive and separates debt from other liabilities, you use debt.

if the data only gives you “total liabilities”, you use it. don’t assume anything. read the questions and the vignette carefully. there might be small clues such as “X has estimated that 95% of total liabilities to be interest-bearing debt” or “management has indicated that the current capital structure is optimal and is equal to their target D/E of something something”