Series 52: 5.1.5.4. Net Debt To Estimated Real Valuation

5.1.5.4.  Net Debt to Estimated Real Valuation

Whereas net debt to assessed valuation measures a community’s debt against a community’s property values assessed for tax purposes, net debt to estimated real valuation measures its debt against the market value of its property. Net debt to assessed valuation will generally be higher than net debt to estimated real valuation. To see why, recall that a ratio is essentially a fraction. If the denominator of a fraction gets larger while the numerator stays the same, the entire fraction as a whole will get smaller. Both of these ratios have the same number, net debt, in the numerator. Meanwhile, a