Debt-to-Capital Ratio

The Debt-to-Capital Ratio is a financial metric that compares a company’s total debt to its total capital (the sum of debt and equity). It provides insight into the company’s financial structure and the proportion of its capital that comes from debt financing. A higher debt-to-capital ratio suggests a company is more reliant on debt to fund its operations, which may increase financial risk.

Example

A company with $5 million in debt and $15 million in total capital (debt + equity) has a debt-to-capital ratio of 33%, meaning one-third of its capital comes from debt.