To find a company’s capital structure, pull its most recent Form 10-K from the SEC’s EDGAR database, add the short-term and long-term debt on the balance sheet, multiply shares outstanding by the current stock price to get market equity, and divide debt by equity. That single ratio is the core snapshot of how the business funds itself, and the whole process takes about fifteen minutes once you know where to look.
Where the Numbers Come From
Every company with publicly traded securities has to file annual and quarterly reports with the Securities and Exchange Commission under federal law.1Office of the Law Revision Counsel. 15 USC 78m – Periodical and Other Reports The annual report is Form 10-K, and it holds the audited financial statements you need, including the balance sheet.2U.S. Securities and Exchange Commission. Form 10-K For fresher figures between annual reports, Form 10-Q gives you unaudited quarterly updates.
Both filings are free through EDGAR. Open the SEC’s filing search page, enter the company name or ticker, and filter by form type.3U.S. Securities and Exchange Commission. Search Filings Before you start calculating, gather three numbers from the filing: total short-term debt, total long-term debt, and shares of common stock outstanding. The share count appears on the cover page of the 10-K, where the form instructs companies to report shares as of the latest practicable date.2U.S. Securities and Exchange Commission. Form 10-K The last piece is the current stock price, available from any brokerage platform or financial data site.
Reading Debt Off the Balance Sheet
Inside the 10-K, go to the Consolidated Balance Sheets, usually in Part II, Item 8. The liabilities section is where debt sits. Two line items matter:
- Current portion of long-term debt, which is the slice of borrowing that comes due within twelve months. It appears under current liabilities.
- Long-term debt, which is everything with a maturity beyond one year. This includes bonds, term loans, and credit facilities, listed under non-current liabilities.
Add the two together for total debt. Then check the header of the balance sheet for the reporting denomination. Most large companies report in millions, so a figure printed as “$2,500” actually means $2.5 billion. Missing that detail throws off every ratio.
Lease Liabilities
Current accounting rules require companies to recognize both operating and finance leases on the balance sheet as liabilities whenever the lease term exceeds twelve months.4Financial Accounting Standards Board. Leases Before that standard took effect, operating leases stayed off the balance sheet, and heavily leased businesses looked less leveraged than they were. Now those obligations appear as separate current and non-current line items.
Whether to fold leases into your debt figure depends on the comparison you’re making. Credit rating agencies routinely include them. If you’re comparing a company that owns its facilities against one that leases them, excluding leases distorts the result. At a minimum, check the notes to the financial statements for a lease breakdown so you can make an informed choice.
Preferred Stock
Preferred stock occupies a gray area. It pays a fixed dividend and ranks ahead of common stock in liquidation, so it behaves like debt, but the balance sheet classifies it as equity, listed within the stockholders’ equity section. For capital structure work, it’s cleanest to treat any meaningful preferred stock as its own category rather than lumping it into debt or common equity. That way you see how much of the company’s funding comes from each source without hiding anything.
Calculating Market Equity
The equity side uses market value, not the book value shown on the balance sheet. Book value reflects historical accounting entries. Market value reflects what investors collectively think the business is worth right now. The math is straightforward: shares outstanding times current share price. A company with 200 million shares trading at $75 has a market capitalization of $15 billion, and that is the equity figure for your ratios.
One caveat trips people up. The share count on the 10-K cover page is stated as of a specific date that may be weeks or months old. If the company has been buying back stock or issuing new shares, the actual number has moved. For a quick analysis, the 10-K figure is fine. For a more precise calculation, use the most recent 10-Q or a press release with an updated share count.
Running the Ratios
Once you have total debt and market equity, a few calculations turn those raw numbers into something useful.
Debt-to-Equity
The most common capital structure metric. Divide total debt by market equity. A company with $3 billion in debt and $6 billion in equity has a debt-to-equity ratio of 0.5, meaning fifty cents of borrowed money for every dollar of equity. A ratio above 2.0 means debt is more than double equity, which signals aggressive leverage that could become dangerous in a downturn. A ratio below 0.5 generally indicates conservative financing.
Debt-to-Capital
This variation answers a slightly different question: what percentage of total funding comes from debt? Divide total debt by the sum of debt and equity. Using the same numbers, $3 billion divided by $9 billion equals 0.33, so debt accounts for a third of the company’s capitalization. Some analysts prefer this metric because it’s bounded between 0 and 1, which makes cross-company comparisons more intuitive than debt-to-equity ratios that can spike to 5 or 10 in heavily leveraged firms.
Enterprise Value
Enterprise value combines equity and debt into a single figure, then subtracts cash. The formula is market capitalization plus total debt minus cash and cash equivalents. A company with $15 billion in market cap, $3 billion in debt, and $2 billion in cash has an enterprise value of $16 billion. That figure represents the theoretical price to acquire the entire business, paying off debt and pocketing the cash. Comparing enterprise value to earnings (the EV/EBITDA multiple) works better for cross-company comparison than looking at share price alone, because it accounts for how much of each company’s value is financed by borrowing.
Reading the Ratio Against the Right Benchmark
A debt-to-equity ratio of 1.5 would be alarming for a software company and perfectly normal for an electric utility. Capital-intensive industries carry more debt because they need enormous upfront investment in physical infrastructure, and lenders are comfortable extending credit when tangible assets serve as collateral. As of early 2026, regulated electric utilities averaged a debt-to-equity ratio around 1.5, while application software companies averaged roughly 0.3. Semiconductor firms came in even lower, around 0.29.
The practical lesson: always compare a company’s ratio to its industry peers, not a universal benchmark. A technology company at 0.8 is actually more leveraged than most of its competitors even though the raw number looks modest. A packaging company at 1.4 may be right in line with sector norms. Most financial data providers and stock screeners let you sort by industry to find these comparisons quickly.
Can the Company Afford Its Structure?
The debt-to-equity ratio describes the shape of the capital structure. Two other metrics tell you what that shape costs and whether the company can carry it.
Interest Coverage
This ratio measures whether operating profit is enough to cover interest payments. Divide earnings before interest and taxes by interest expense. A result of 5 means operating earnings are five times the interest bill, which is comfortable. A result below 2 is barely adequate for a stable business, and anything below 1 means the company isn’t earning enough to pay its interest at all. When a debt-to-equity ratio looks high, interest coverage is the next thing to check. A company can carry heavy debt sustainably if earnings dwarf the interest cost, and even moderate debt can be dangerous if earnings are thin or volatile.
Weighted Average Cost of Capital
WACC blends the cost of debt and the cost of equity into a single percentage, weighted by how much of each the company uses. Multiply the equity proportion by the required return on equity, then add the debt proportion times the interest rate on debt, adjusted down for the tax deduction on interest. If equity is 70% of the structure at a 10% required return, and debt is 30% at a 5% interest rate with a 21% tax rate, WACC comes out to roughly 8.2%. A lower WACC means the company can generate value from projects at a lower hurdle. Shifts in capital structure change WACC directly, which is why management teams pay close attention to the mix.
Private Companies
Private companies don’t file with the SEC, so their financials aren’t on EDGAR. If you’re analyzing a private business, you’ll need to request statements directly. Those may come as audited annual statements, tax returns, or internal management reports, and the quality varies widely because private firms aren’t held to the same reporting standards as public ones. The debt-side calculations work the same once you have the numbers. Estimating equity is the harder half, since there’s no market price. Analysts typically approximate it using valuation multiples from comparable public companies applied to the private firm’s earnings, or through a discounted cash flow analysis.