Total Debt-to-Capitalisation

Glossary

Banking

Total Debt-to-Capitalisation

A company’s debt-to-capital-ratio is a core measure of corporate leverage, measuring a company’s level of indebtedness against its capital levels. In other words, it measures how much of a company’s day-to-day operations are covered by borrowed funds relative to own funds. Analysts use the ratio: total debt ÷ (total debt + capital) to evaluate how risky a company’s capital structure might be and assess any latent risks to solvency in the event of adverse economic, sector or company-specific conditions.

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