What is a debt to capital ratio?
It measures what percentage of a company's total capital (debt + equity) comes from debt, indicating financial leverage.
What is a good debt to capital ratio?
Below 0.3 is considered low risk and conservative. 0.3-0.5 is moderate risk and balanced. Above 0.7 is very high risk.
Can a debt to capital ratio exceed 1?
No. The ratio ranges from 0 to 1 (or 0% to 100%) because debt is only part of the total capital in the denominator.
Is debt to capital ratio the same as debt to equity?
No. Debt to capital divides debt by total capital (debt + equity), while debt to equity divides debt by equity only.
How do I calculate debt to capital ratio?
Divide total debt by total capital. Total capital equals total debt plus total equity. Multiply by 100 for percentage.