# What is the ratio of long term debt to total long term capital?

Category:
personal finance
credit cards

A

**Long Term Debt**to Capitalization**Ratio**is the**ratio**that shows the financial leverage of the firm. This**ratio**is calculated by dividing the**long term debt**with the**total capital**available of a company. The**total capital**of the company includes the**long term debt**and the stock of the company.

Also, how do you calculate long term debt ratio?

**Long-Term Debt Ratio – a ratio, measuring the percentage of company's total assets financed with long-term debt.**

- Formula(s): Long-Term Debt Ratio = Long-Term Debt ÷ Total Assets.
- Example: Long-Term Debt Ratio (Year 1) = 132 ÷ 656= 0,20.
- Conclusion:

**debt**-to-

**capital ratio**is calculated by taking the company's interest-bearing

**debt**, both short- and long-term

**liabilities**and dividing it by the

**total capital**.

**Total capital**is all interest-bearing

**debt**plus shareholders'

**equity**, which may include items such as common stock, preferred stock, and minority interest.

Likewise, what is a good total capital ratio?

**Total capital ratio**: The idea is that all banks must ensure that a reasonable proportion of their risk is covered by permanent **capital**. Banks must maintain a minimum **total capital ratio** of 8%. In effect, this means that 8% of the risk-weighted assets must be covered by permanent or near permanent **capital**.

Analysis and Interpretation. Typically, a LT **debt ratio** of less than 0.5 is considered **good** or **healthy**. It's important to analyze all **ratios** in the context of the company's industry averages and its past.