What is the 'LongTerm Debt To Capitalization Ratio'
The longterm debt to capitalization ratio is a ratio showing the financial leverage of a firm, calculated by dividing longterm debt by the amount of capital available:
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BREAKING DOWN 'LongTerm Debt To Capitalization Ratio'
A variation of the traditional debttoequity ratio, this value computes the proportion of a company's longterm debt compared to its available capital. By using this ratio, investors can identify the amount of leverage utilized by a specific company and compare it to others to help analyze the company's risk exposure. Generally, companies that finance a greater portion of their capital via debt are considered riskier than those with lower leverage ratios.
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RELATED FAQS

How can I use the debttocapital ratio to evaluate a stock?
Understand the significance of the debt to capital ratio of financial leverage, and learn how investors and analysts make ... Read Answer >> 
What are the different capitalization ratios?
Learn about capitalization ratios, three different ratios that measure debt in relation to capital structure and how to calculate ... Read Answer >> 
Which leverage ratios are most useful for analyzing manufacturing companies?
See which leverage ratios investors and creditors are likely to use when analyzing the debt burdens for manufacturing companies. Read Answer >> 
What are the most common leverage ratios for evaluating a company?
Learn more about some of the most common leverage ratios used by traders to determine whether a company is using debt in ... Read Answer >> 
Which financial ratio best reflects capital structure?
Learn about the debttoequity ratio and why this metric is widely considered the most useful reflection of a company's capital ... Read Answer >> 
What is a good debt ratio, and what is a bad debt ratio?
Learn about the factors that influence how investors and lenders evaluate the debt ratio for a company and why the answer ... Read Answer >>