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Long-Term Debt/Capitalization Ratio |
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Long-Term Debt/Capitalization Ratio In risk analysis, a way to determine a company's leverage. The ratio is calculated by taking the company's long-term debt and dividing it by the sum of its long-term debt and its preferred and common stock. Put graphically: Ratio = Long-term debt / (Long-term debt + Preferred stock + Common stock) The greater a company's leverage, the higher the ratio. Generally, companies with higher ratios are thought to be more risky because they have more liabilities and less equity. Want to thank TFD for its existence? Tell a friend about us, add a link to this page, add the site to iGoogle, or visit the webmaster's page for free fun content. |
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