Debt to Capital Calculator
Analyze company leverage and capital structure composition for financial risk assessment
Calculate Debt-to-Capital Ratio
Include bonds, loans, and all debt that generates interest
Include preferred stock, common stock, and retained earnings
Example Calculation
Manufacturing Company Example
Interest-Bearing Debt: $500,000 (bank loans + bonds)
Shareholders' Equity: $1,200,000 (common stock + retained earnings)
Total Capital: $1,700,000
Calculation
Debt-to-Capital Ratio = $500,000 ÷ $1,700,000
Debt-to-Capital Ratio = 0.2941 (29.41%)
Risk Level: Low (Conservative capital structure)
Capital Structure Components
Debt Capital
Interest-bearing obligations
Bonds, loans, credit facilities
Equity Capital
Shareholders' ownership
Common stock, retained earnings
Total Capital
Debt + Equity
Total financing sources
Financial Analysis Tips
Compare ratios with industry benchmarks
Consider debt service coverage ability
Evaluate trends over multiple periods
Assess economic cycle impact on leverage
Understanding Debt-to-Capital Ratio
What is Debt-to-Capital Ratio?
The debt-to-capital ratio measures the proportion of a company's total capital that comes from interest-bearing debt. It helps assess financial leverage and capital structure efficiency.
Why is it Important?
- •Evaluates financial risk and leverage
- •Assesses capital structure efficiency
- •Compares financing strategies
- •Guides investment decisions
Formula Explanation
Debt-to-Capital = Debt ÷ (Debt + Equity)
- Debt: Interest-bearing obligations (loans, bonds)
- Equity: Shareholders' ownership value
- Capital: Total financing (debt + equity)
- Result: Proportion of debt in capital structure
Industry Note: Optimal ratios vary by sector - utilities may sustain higher leverage than technology companies