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