common stock ratio

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Common Stock Ratio

The ratio of the value of a company's common stock to its total capitalization, expressed as a percentage. A common stock ratio is an expression of how much a company is financed by equity. A high ratio indicates that the company finances a great deal of its operations through equity and, perhaps, is averse to debt. This signifies a conservative financial plan, though some analysts question whether or not this is beneficial.

common stock ratio

The portion of a firm's capitalization that represents owner(s) equity. A relatively high common stock ratio is the mark of a conservatively financed company.