total capital

CFA Level II
#1

when mention “debt-to-total capital” ratio, what is total capital? Thanks.

#2

total debt + equity + minority interest

#3

where total debt = long term debt + current liabilities

#4

Funny that I also learnt this for the first time at level 2.

#5

what is minority interest? Thanks. cfaboston28 Wrote: ------------------------------------------------------- > total debt + equity + minority interest

#6

may be a stupid question, but should you include curr. liabilities in total debt? I thought total debt = ST-debt + LT-debt, current liabilities excluded.

#7

a liability is not necessarily debt right ? or is it ?

#8

It’s a liability, so I would say it’s a debt owed, most likely short-term though…

#9

Short-term debt = debt the company owes usually within 1yr. It is a part of Current Liabilities, but for Total debt calculation, I think you only include the ST-debt portion, not the whole CL.

#10

how about accounts payable? is that debt too then ?

#11

AP is CL, so according to MP2438, it’s not part of Total Debt.

#12

^^ I am looking for confirmation. The reason I began asking was because I came across a problem that asked to calculate total debt, and the answer didn’t include current liabilities. In that problem, ST-debt was 0, so the calculation just had the different pieces of LT-debt, even though Current Liabilities were not 0.

#13

I only have my Schweser books and I don’t see any reference to Total Debt. The CFAI books might have it, but those are at home.

#14

According to Investopedia: http://www.investopedia.com/terms/d/debt-to-capitalratio.asp Total capital includes the company’s debt and shareholders’ equity, which includes common stock, preferred stock, minority interest and net debt.

#15

should be the BV of the debts and equity, not MV. Total Capital is the same thing as invested capital right?

#16

http://www.investopedia.com/terms/t/totaldebttototalassets.asp It isn’t total debt / total capital, but the numerator should suffice.

#17

It should be all interest bearing debt

#18

there are 2 debt/total capital ratio: first 1, Current + Long term liability/Curr + long term + common and prefered equity + minority interet 2nd: LTD/LTD + minority interet + common and prefered equity another definition is Fixed capital + working capital, I would think the 2nd definition appears in EVA calculations only