The debt-to-capital ratio is a financial leverage ratio, similar to the debt-to-equity (D/E) ratio. It compares a company’s total debt to its total capital, which is composed of debt financing and equity. The ratio is used as a baseline for a company’s financial standing and is something investors use when determining the risk of a particular investment.
Key Takeaways
- The debt-to-capital ratio is a financial leverage ratio, similar to the debt-to-equity ratio.
- This metric indicates a company’s overall financial soundness while revealing the proportionate levels of debt and equity financing.
- Increasing profitability, better management of inventory, and restructuring debt can help lower a company’s debt-to-capital ratio.
