Capitalization Ratio Calculator

About this calculator

The capitalization ratio is total debt / (total debt + total equity) — the fraction of a company's permanent, long-term capital structure that comes from borrowed money rather than shareholder equity.

Credit analysts and lenders use it as a core measure of long-term solvency risk: a higher ratio means more of the company is financed by debt that must eventually be repaid with interest regardless of how the business performs, which is exactly why it's one of the standard covenants lenders monitor and one of the first ratios equity investors check before buying into a heavily leveraged company.