Long-Term Debt/Capitalization Ratio
(redirected from Long Term Debt-Total Capital Ratios)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.
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.
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