According to the theory of capital structure, excessive debt financing can result in default risk or bankruptcy, and liquidation. This study is an attempt to identify the impact of debt ratio on the performance of State-Owned Enterprises (SOEs). In order to achieve this, it surveyed 140 Indonesian SOEs and categorised them as healthy, less healthy and unhealthy based on their Return on Asset (ROA), Debt-to-asset (DA), Asset-to-Utility (AU) and Current Asset ratio (CR). With regards to specific financial indicators that can be utilised to differentiate the company based on their categorisation, ANOVA and discriminant analysis were employed. The results show that healthy companies (67%) tend to use debt financing more conservatively than the less healthy (22%) and unhealthy ones (11%). Additionally, less healthy companies were considerably more aggressive in utilising debt financing.