How this calculator works
The debt-to-capital ratio compares interest-bearing debt with the sum of that debt and shareholders' equity. It describes the long-term capital mix: a ratio of 0.40 means lenders provide 40% of the financing and shareholders the other 60%. Analysts often prefer it to the debt-to-equity ratio because the denominator cannot be small or negative in ordinary circumstances, which keeps the ratio stable across companies. It excludes non-interest-bearing liabilities such as trade payables, so it measures funded debt rather than every obligation.
Formula
Debt-to-capital = interest-bearing debt / (interest-bearing debt + shareholders' equity). Debt share = ratio, and equity share = 1 - ratio. Multiply by 100 to read the result as a percentage.
Worked example
A company has $400,000 of interest-bearing debt and $600,000 of shareholders' equity, so total capital is $1,000,000. The debt-to-capital ratio is 0.40: debt is 40% of capital and equity is 60%.
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Frequently asked questions
How is this different from debt to equity?
Debt to equity divides debt by equity alone, so a small equity balance produces a very large number. Debt to capital divides by debt plus equity, which keeps the result between 0 and 1 for positive equity.
Should leases count as debt?
Under modern lease accounting, operating leases appear as liabilities on the balance sheet. Whether to count them depends on the analysis; if you do, add the lease liability to both debt and capital.
What is a good ratio?
It varies by industry. Utilities and property companies often carry more debt than software firms. Compare within a sector, and look at interest coverage and maturity as well.