Bond Ratio
Categories: Bonds, Muni Bonds
The percentage of a company's capital that is represented by debt. The higher the bond ratio, the more the company is leveraged and in debt. That's not necessarily a bad thing (are they using the debt to make more money or to pay for hot tubs for executives?), but it's something to be aware of. In most cases, if a company has a bond ratio of more than 30%, it is highly leveraged. In some industries, though, being in debt up to your eyeballs and issuing lots of bonds is the norm. We're looking at you, airlines.
Example
If a company has total capital (debt plus equity) of $100, and $30 of that consists of bonds, then the bond ratio is 30%.