# Debt-to-Capital Vs Debt-to-Assets

What is the difference between Debt-to-Capital and Debt-to-Assets?

isn’t capital = equity?

There is no difference between Debt to Total Capital or Debt to Assets.

job71188 Wrote: ------------------------------------------------------- > There is no difference between Debt to Total > Capital or Debt to Assets. Here is what investopedia says - What Does Total Debt To Total Assets Mean? A metric used to measure a company’s financial risk by determining how much of the company’s assets have been financed by debt. Calculated by adding short-term and long-term debt and then dividing by the company’s total assets. D to A = Total Liabilities / Total Assets Investopedia explains Total Debt To Total Assets This is a very broad ratio as it includes short- and long-term debt as well as all types of both tangible and intangible assets. D to C = Debt / Equity + Debt What Does Debt-To-Capital Ratio Mean? A measurement of a company’s financial leverage, calculated as the company’s debt divided by its total capital. Debt includes all short-term and long-term obligations. Total capital includes the company’s debt and shareholders’ equity, which includes common stock, preferred stock, minority interest and net debt. Calculated as: D to C = Debt / Equity + Debt Companies can finance their operations through either debt or equity. The debt-to-capital ratio gives users an idea of a company’s financial structure, or how it is financing its operations, along with some insight into its financial strength. The higher the debt-to-capital ratio, the more debt the company has compared to its equity. This tells investors whether a company is more prone to using debt financing or equity financing. A company with high debt-to-capital ratios, compared to a general or industry average, may show weak financial strength because the cost of these debts may weigh on the company and increase its default risk.