Long-Term Debt To Capitalization Ratio

AAA

DEFINITION of 'Long-Term Debt To Capitalization Ratio'

A ratio showing the financial leverage of a firm, calculated by dividing long-term debt by the amount of capital available:

Long-Term Debt To Capitalization Ratio

INVESTOPEDIA EXPLAINS 'Long-Term Debt To Capitalization Ratio'

A variation of the traditional debt-to-equity ratio, this value computes the proportion of a company's long-term 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.

RELATED TERMS
  1. Capitalization

    1. In accounting, it is where costs to acquire an asset are included ...
  2. Common Stock

    A security that represents ownership in a corporation. Holders ...
  3. Debt

    An amount of money borrowed by one party from another. Many corporations/individuals ...
  4. Interest Sensitive Stock

    Any stock with a price that is extremely sensitive to changes ...
  5. Debt/Equity Ratio

    A measure of a company's financial leverage calculated by dividing ...
  6. Leverage

    1. The use of various financial instruments or borrowed capital, ...
Related Articles
  1. Will Corporate Debt Drag Your Stock ...
    Investing Basics

    Will Corporate Debt Drag Your Stock ...

  2. Debt Reckoning
    Investing

    Debt Reckoning

  3. Introduction To Fundamental Analysis
    Markets

    Introduction To Fundamental Analysis

  4. Advanced Financial Statement Analysis
    Options & Futures

    Advanced Financial Statement Analysis

Hot Definitions
  1. Halloween Strategy

    An investment technique in which an investor sells stocks before May 1 and refrains from reinvesting in the stock market ...
  2. Halloween Massacre

    Canada's decision to tax all income trusts domiciled in Canada. In October 2006, Canada's minister of finance, Jim Flaherty, ...
  3. Zombies

    Companies that continue to operate even though they are insolvent or near bankruptcy. Zombies often become casualties to ...
  4. Witching Hour

    The last hour of stock trading between 3pm (when the bond market closes) and 4pm EST. Witching hour is typically controlled ...
  5. October Effect

    The theory that stocks tend to decline during the month of October. The October effect is considered mainly to be a psychological ...
  6. Repurchase Agreement - Repo

    A form of short-term borrowing for dealers in government securities.
Trading Center