Long-Term Debt To Capitalization Ratio

What is the 'Long-Term Debt To Capitalization Ratio'

The long-term debt to capitalization ratio is 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

BREAKING DOWN '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.

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RELATED FAQS
  1. How can I use the debt-to-capital 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 >>
  2. What is the difference between the capital adequacy ratio and the leverage ratio?

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  3. Does a high debt to capital ratio make a company a bad investment?

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  4. What are the different capitalization ratios?

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  5. Which leverage ratios are most useful for analyzing manufacturing companies?

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