What Is a Long-Term Debt Ratio?

The long-term debt ratio, also called "capitalization ratio", is an indicator for judging the debt situation of an enterprise as a whole. It is the ratio of long-term debt to total assets. Total assets are the sum of liabilities and shareholders' equity.

Long-term debt ratio

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Formulated as follows:

Generally speaking, right

Fixed asset pair

The company's ability to repay long-term debt mainly includes current ratio, quick ratio, current asset composition ratio, shareholder equity to debt ratio, debt ratio, debt operating ratio, equity ratio, fixed ratio, fixed asset to long-term debt ratio, and interest protection multiples. . The ratio of fixed assets to long-term liabilities refers to the ratio between the fixed assets (net value) of an enterprise and its long-term liabilities. It is generally believed that this value should be above 100%, otherwise the rights of creditors will be difficult to guarantee. Taking a commercial bank as an example, the index should be greater than 1. This shows that the net value of the company's fixed assets is sufficient to guarantee its long-term debt, and the risk of commercial bank loans is relatively small.