Help in interpreting this graph? Assets/Liability ratio I'm having some doubts on how to interpret the following ratio.
I tend to think of leverage as a measure of how much debt the firm takes on.
By equity=Assets-Liabilities. When Equity is negative, I would say a firm is insolvent or very close to not meet its financial obligations. 

What's the rationale for the ratio below? When asset/liability is smaller than one, doesn't it mean that assets &lt; liabilities, and so the firm is insolvent? Do they mean these Chinese industries are insolvent?

Wouldn't it be better to use equity instead of assets for a measure of leverage?
Wouldn't it be better to use equity instead of assets for a measure of
  leverage?


No, but the correct ratio is

$$\frac{\text{Assets} }{ \text{Equity}}$$

Reasoning: with "leverage" we want to obtain information on how much a company uses debt for financing. And we want to have the correspondence "higher leverage $\to$ more debt financing".

Moreover, in order to be consistent with the definition of "leverage" ("the exertion of force by means of a lever"), we want the information on debt to be in the denominator, since we want to form a ratio.

In order to achieve all these together, we need to put equity on the denominator, so that lower equity (implying higher debt for same level of assets) increases the value of the ratio, and we get the higher leverage.