![]() ![]() Total capital covers all interest-bearing debt on top of shareholders’ equity, which can include common and preferred stock, minority interest, and the like. The debt to capital ratio is a risk metric that can be used to calculate a company’s ability to manage a drop in sales because it emphasizes the association between debt and equity financing. Through this ratio, they can determine whether or not they are capable of wiping out their debts using working capital alone.Ī similar ratio, debt to capital, determine the percentage of debt used by a company to fund its operations as opposed to its capital. This metric is particularly crucial for businesses that are nearing liquidation. ![]() The working capital to debt ratio reflects a company’s ability to settle all of its debts using only its working capital. ![]()
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