In generally accepted accounting principles (GAAP), debt to asset ratio does NOT use just cash and unencumbered assets.

To put it in a personal example. Assuming you have $5,000 cash. Suppose you had bought a house for $100,000 and have a mortgage for $80,000. Also, suppose you have a car worth $10,000 paid off and unencumbered.

You have $80,000 debt and $115,000 in assets. Your debt to asset ratio is $80,000 / $115,000 = 0.70.

It is not figured as $80,000 debt with $10,000 in unencumbered assets and $5,000 in cash for an incorrect debt to asset ratio of $80,000 / $15,000 = 5.33.

That house asset has value. If you default on your mortgage the bank will come to take your asset. They will take your $100,000 home. They consider it an asset.