Long Term Debt to Equity Ratio

The long-term debt to equity ratio measures how much long term debt a company has compared to its total equity.

Because the numerator of the above ratio is Total Debt – Current Liabilities, the numerator includes the non-current portion of long-term debt only.

The current portion of long-term debt as well as other current liabilities are excluded.

A ratio in excess of 1:1 indicates more reliance on long-term debt financing than on equity financing.