Hey guys, what does the Debt / Capital ratio tell you that the Debt to EBITDA ratio doesn't? I've always relied on the latter along with interest coverage as a starting point for debt implications.
But I see other folks at my firm use the Debt / Capital ratio as well, although I'm not too sure why. Can anyone explain what insight this ratio gives you that the other doesn't? Thanks
Debt to EBITDA and interest coverage are measures that help you assess the future ability to pay down the debt. They compare profit generation to debt levels. Debt to cap is more of a pure capital structure measure that I have used as a way to just compare capital structure across competing firms.
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