There is no fair debt-capital ratio because it might vary from business to business. For new businesses, the debt would be little or non-existent. Therefore, the debt-to-capital ratio for start-ups would be in the range of 0 to 10%.
But when it comes to small enterprises, the debt-to-capital ratio is a little higher, hovering between 10 and 30 percent.
And the debt would look excessive if you considered the banking or insurance businesses – for these businesses, the debt to capital ratio is meaningless. The debt-to-capital ratio would then be between 70 and 90 percent. Although the debt-to-capital ratio is significant, many analysts and investors also use the debt-to-equity ratio.
