This ratio is a common leverage measure in credit analysis and loan covenants. Values above about 0.6 indicate high leverage for most industries.
How to use the Debt-to-Capital Ratio Calculator
- Interest-bearing debt
- Shareholders’ equity
Results update as you type, and every field accepts the units shown in its menu.
How it works
Enter interest-bearing debt and shareholders’ equity.
Tips
- Check whether rates are quoted annually, semi-annually or per period.
- Bond prices and yields move in opposite directions – a higher yield means a lower price.
- Use the bond’s clean price (without accrued interest) for yield calculations.
- Credit ratios are most useful when tracked over several years.
Common mistakes to avoid
- Confusing the coupon rate with the yield.
- Using the face value instead of the market price.
- Forgetting that callable bonds may be redeemed before maturity.
Inputs explained
| Field | What to enter |
|---|---|
| Interest-bearing debt | Amount in your currency |
| Shareholders’ equity | Amount in your currency |
What each result means
- Debt to capital ratio = [Interest-bearing debt]÷([Interest-bearing debt] + [Shareholders’ equity])
- As a percentage = [Debt to capital ratio]×100
- Debt to equity ratio = [Interest-bearing debt]÷[Shareholders’ equity]
Example values
How the main result changes when Interest-bearing debt changes and everything else stays at the example values above:
| Interest-bearing debt | Debt to capital ratio |
|---|---|
| 200,000 | 0.25 |
| 300,000 | 0.333 |
| 400,000 | 0.4 |
| 500,000 | 0.455 |
| 600,000 | 0.5 |
| 800,000 | 0.571 |
Formula
Debt-to-capital = interest-bearing debt ÷ (interest-bearing debt + shareholders' equity)Worked example
Inputs — Interest-bearing debt: $400,000; Shareholders' equity: $600,000.
Results — Debt to capital ratio = 0.4; As a percentage = 40 %; Debt to equity ratio = 0.67.
Frequently asked questions
What is a good debt-to-capital ratio?
Below 0.5 is generally comfortable.
What counts as debt?
Short- and long-term interest-bearing debt, including leases.
How is it related to D/E?
D/C = D/E ÷ (1 + D/E).
What formula does the Debt-to-Capital Ratio Calculator use?
Debt-to-capital = interest-bearing debt ÷ (interest-bearing debt + shareholders' equity).