Debt-to-capital ratio
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A company's debt-to-capital ratio or D/C ratio is the ratio of its total debt to its total capital, its debt and equity combined. The ratio measures a company's capital structure, financial solvency, and degree of leverage, at a particular point in time. The data to calculate the ratio are found on the balance sheet.
Practitioners use different definitions of debt:
- Any interest-bearing liability to qualify
- All liabilities, including accounts payable and deferred income
- Long-term debt and its associated currently due portion (measures capital structure)
Companies alter their D/C ratio ratio by issuing more shares, buying back shares, issuing additional debt, or retiring debt.
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