Long-Term Debt To Capitalization Ratio


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

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.

  1. Preferred Stock

    A class of ownership in a corporation that has a higher claim ...
  2. Debt/Equity Ratio

    Debt/Equity Ratio is debt ratio used to measure a company's financial ...
  3. Long-Term Debt

    Long-term debt consists of loans and financial obligations lasting ...
  4. Debt

    An amount of money borrowed by one party from another. Many corporations/individuals ...
  5. Capitalization

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

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