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The remaining long-term debt is used in the numerator of the long-term-debt-to-equity ratio. A similar ratio is debt-to-capital (D/C), where capital is the sum of debt and equity: D/C = total liabilities / total capital = debt / debt + equity The relationship between D/E and D/C is: D/C = D / D+E = D/E / 1 + D/E
For example, the debt-to-equity ratio and interest coverage ratios are supplemental ways to see how leveraged a company is. Remember that a high debt-to-assets ratio isn’t necessarily a bad thing.
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. [1] The data to calculate the ratio are found on the balance sheet.
For example, if you had an outstanding loan balance of $250,000 and your home appraised for $235,000, you’d have negative equity. It’s not a great state to be in.
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An entity's debt-to-equity funding is sometimes expressed as a ratio. For example, a gearing ratio of 1.5:1 means that for every $1 of equity the entity has $1.5 of debt. A high gearing ratio can create problems for: creditors, which bear the solvency risk of the company, and; revenue authorities, which are concerned about excessive interest ...
For example, let’s say that your current mortgage loan balance is $360,000. But your home is only worth $300,000. In that case, you would have negative equity of $60,000.
Debt ratios measure the level of borrowed funds used by the firm to finance its activities. Debt ratio [25] Total Debts or Liabilities / Total Assets Long-term debt to assets ratio [26] Long-term debt / Total assets Debt to equity ratio [27] (Long-term Debt) + (Value of Leases) / (Average Shareholders Equity)