Long-Term Debt/Capital (%)
Long-term debt to capital, or the long-term debt to capital ratio, divides a company's long-term debt by its total capital, meaning the combined total of its debt and shareholders' equity. It shows what percentage of the permanent funding behind the business comes from borrowings that are not due within the next year.
A higher percentage means the company leans more heavily on long-term borrowing to finance itself. A company with no long-term debt scores zero, and one funded mostly by bonds and term loans may score well above 50%.
All inputs come from the balance sheet in SEC filings and the ratio is calculated from those reported figures. Long-term debt is the noncurrent portion of borrowings, commonly tagged LongTermDebtNoncurrent in XBRL, which excludes amounts due within one year. Those current maturities are counted in short-term debt. Regulation S-X Rule 5-02.22 requires companies to present bonds, mortgages, and other long-term debt as a balance-sheet caption and to disclose each issue's interest rate and maturity. Total capital is total debt plus total shareholders' equity.
Definitions of the denominator vary. Some analysts use only long-term debt plus equity, leaving short-term borrowing out entirely, which produces a higher ratio for companies that rely on commercial paper or revolving credit. Treatment of leases also differs: under ASC 842, finance lease obligations are debt-like and are often counted, while operating lease liabilities are included by some providers and not others. GeminIQ's total debt includes lease obligations. Negative equity, common at companies with large buyback programs, can push the ratio above 100%.
The ratio focuses on the durable part of a capital structure, since long-term debt usually carries fixed terms and cannot be recalled on short notice. Comparing it with total debt to capital shows how much of a company's borrowing is near-term and exposed to refinancing risk. Banks and insurers are typically analyzed with regulatory capital measures instead, because their balance sheets do not separate current and noncurrent liabilities.
A: Total debt to capital counts all borrowings, including debt due within a year. Long-term debt to capital counts only the noncurrent portion, so the gap between the two shows how much debt is maturing soon.
A: In this ratio, no. The portion of long-term debt due within twelve months is classified as a current liability and treated as short-term debt.
A: It depends on the industry. Utilities and real estate companies routinely carry high levels because their cash flows are steady, while cyclical companies generally keep the ratio lower.
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