Enter the total long-term debt ($) and the total debt ($) into the Long-Term Debt Ratio Calculator. The calculator will evaluate and display the Long-Term Debt Ratio.

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## Long-Term Debt Ratio Formula

The following formula is used to calculate the Long-Term Debt Ratio.

LTDR = LTD / TD * 100

- Where LTDR is the Long-Term Debt Ratio (%)
- LTD is the total long-term debt ($)
- TD is the total debt ($)

To calculate the long-term debt ratio, divide the total long-term debt by the total overall debt.

## How to Calculate Long-Term Debt Ratio?

The following example problems outline how to calculate Long-Term Debt Ratio.

Example Problem #1:

- First, determine the total long-term debt ($).
- The total long-term debt ($) is given as: 1,000.

- Next, determine the total debt ($).
- The total debt ($) is provided as: 4,000.

- Finally, calculate the Long-Term Debt Ratio using the equation above:

LTDR = LTD / TD * 100

The values given above are inserted into the equation below and the solution is calculated:

LTDR = 1,000 / 4,000 * 100 = 25.00 (%)

## FAQ

**What is considered long-term debt?**

Long-term debt refers to loans or other forms of debt that have a maturity of more than one year. This can include bonds, lease obligations, and other types of loans that are not due to be paid within the next 12 months.

**Why is the Long-Term Debt Ratio important?**

The Long-Term Debt Ratio is important because it gives investors and creditors insight into a company’s financial structure and its ability to meet its long-term financial obligations. A lower ratio indicates a company may be less leveraged and potentially in a better position to handle its long-term debt, while a higher ratio could suggest a higher risk of financial distress.

**How can a company improve its Long-Term Debt Ratio?**

A company can improve its Long-Term Debt Ratio by either reducing its total long-term debt or by increasing its total debt capacity, which could involve taking on more short-term debt if it does not significantly increase financial risk. Additionally, improving operational efficiency and profitability can provide more cash flow to service debt, thereby improving the ratio over time.