management Back Forwards
Accounting: Ratio Analysis
 

The Debt/Capital Ratio

This gearing ratio is an alternative presentation of the Debt/Equity ratio (1) above showing the proportion of the company's financial base (excluding non-interest-bearing liabilities) is financed by interest-bearing debt:

= ___All interest bearing or fixed payment capital__
Ordinary Shareholders' funds + interest bearing or fixed payment capital

.

____86.5+68.5___
=
___155.0___
=
0.37 or 37%
266.7+86.5+68.5
266.7+155

 

 

The Total Debt/Total Assets Ratio

This ratio looks at the overall 'strength' of the balance sheet from a bankers point of view - focusing on the proportion of assets financed by outside claims (liabilities):

Total liabilities
=
250.2+86.5+28.9
=
365.6
=
58%
Total Assets
147.8+484.5
632.5