The total debt to total capital ratio is more useful than the total debt to equity capital ratio.

Question

Quizplus · Accepted Answer

The usefulness of the total debt to total capital ratio versus the total debt to equity ratio depends on the specific financial analysis being conducted. Each ratio provides different insights: the total debt to total capital ratio measures the proportion of a company's financing that comes from debt, considering both debt and equity, while the total debt to equity ratio focuses on the relationship between borrowed funds and shareholders' equity, offering a view of the company's leverage.

The Total Debt to Total Capital Ratio Is More Useful