The Debt-To-Capital Ratio is a measurement of a company's financial leverage. The 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.A high debt to capital ratio can indicate that a company is struggling to meet its obligations and may be at risk for bankruptcy. A low debt to capital ratio indicates that a company has little or no long term borrowing and less vulnerability to financial distress.A healthy, well run business will have a lower Debt/Capital Ratio because they will not have as much interest bearing liabilities on their balance sheet. This number can be used as an indicator of how risky it might be for an investor to loan money to this business or buy their stock.
