The proportion of preferred stock, at par, in a company’s total capitalization, This ratio relates the par value of a company’s outstanding preferred stock to its net worth (equity) and long-term debt. The preferred stock ratio can be classified by seniority as senior preferred stock and junior preferred stock.
For example, if a company has $12 million in preferred stock and $90 million in total capitalization, then:
Preferred stock ratio= 12 m/90 m = 13.33%
This implies that 13.33% of the company’s long-term financing comes from preferred stock.
