Capitalization Ratio Formula also called **Cap Ratio Formula**. For the determination of the debt capacity of the company and for the management of the capital structure of the company this is a very useful formula. For measuring the riskiness of the investment in the company investors use this formula.

## Capitalization Ratio Formula

Total Debt to Capitalization Ratio Formula calculated by dividing the total debt by the sum of total debt and shareholders Equity.

**Total Debt to Capitalization Ratio = Total Debt/(Total Debt +Shareholders Equity)**

Capitalization Ratio Formula also calculated as:

**Capitalization Ratio=Total Debt/ Shareholders Equity**

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