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Capitalization ratios

• Show how a firm has financed the investment in assets. There are three capitalization alternatives: debt, preferred equity and common equity.

• Also called financial leverage ratios, these ratios compare debt to total capitalization and thus reflect the extent to which a corporation is trading on its equity. Capitalization ratios can be interpreted only in the context of the stability of industry and company earnings and cash flow.

 
 

Follow this link for all the terms related to capitalratio.

 
 Embedded terms in definition
 Assets
Capitalization
Cash flow
Cash
Common equity
Corporation
Debt
Earnings
Equity
Financial leverage ratios
Financial leverage
Financial lever
Firm
Industry
Its
Leverage ratios
Leverage
Total capital
Trading
 
 Related Terms
 

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