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. Debt

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

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

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

    1. The use of various financial instruments or borrowed capital, ...
  5. Long-Term Debt

    Loans and financial obligations lasting over one year. Long-term ...
  6. Preferred Stock

    A class of ownership in a corporation that has a higher claim ...
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

comments powered by Disqus
Hot Definitions
  1. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  2. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  3. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  4. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
  5. Net Sales

    The amount of sales generated by a company after the deduction of returns, allowances for damaged or missing goods and any ...
  6. Over The Counter

    A security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, etc. The phrase "over-the-counter" ...
Trading Center