Total Debt/Capital (%)
Total debt to capital, commonly called the debt-to-capital ratio, divides a company's total debt by its total capital, which is the sum of that debt and shareholders' equity. It shows what percentage of the money invested in the business, by lenders and owners combined, comes from borrowing.
The ratio runs from 0% for a debt-free company toward 100% for one financed almost entirely by debt. A value of 40% means lenders provide 40 cents of every dollar of capital and shareholders provide the other 60.
The ratio is calculated from balance-sheet figures reported in SEC filings. Total debt is not always a single reported line. GeminIQ takes it as filed when a company reports it, and otherwise sums short-term and long-term debt, including current maturities, commercial paper, revolving credit, and lease obligations. In XBRL, these components are often tagged DebtCurrent, LongTermDebtNoncurrent, and related elements, and shareholders' equity is usually tagged StockholdersEquity.
Because debt appears in both the numerator and the denominator, the ratio stays bounded and is easier to compare across companies than debt to equity, which can climb into the thousands of percent when equity is small. It is mathematically linked to that ratio: a debt-to-equity figure of 100% corresponds to a debt-to-capital figure of 50%. Some providers include preferred stock and noncontrolling interest in capital, which lowers the result, and the treatment of operating lease liabilities also varies, so check the definition before comparing figures from different sources.
Book equity is the weak point. Companies with large buyback programs or accumulated losses can report negative equity, pushing the ratio above 100% even when the business is healthy. Some analysts use the market value of equity instead, which gives a different and more volatile picture. Credit analysts and rating agencies commonly track debt to capital alongside earnings-based measures such as debt to EBITDA, which show the capacity to repay rather than the funding mix. Banks and insurers are typically assessed with regulatory capital measures instead.
A: It depends on the industry. Utilities and other businesses with stable, regulated cash flows commonly run higher ratios, while cyclical and technology companies usually keep them lower. Compare with close peers.
A: They use the same inputs arranged differently. Debt to capital equals debt to equity divided by one plus debt to equity, so each can be converted into the other.
A: When shareholders' equity is negative, the denominator is smaller than total debt. This usually reflects buybacks or accumulated losses rather than a debt load larger than the company's value.
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