Debt-to-Equity · Construction Financial Ratios · Leverage · Bonding · Banking
Debt-to-Equity · Construction Finance · Leverage · Financial Ratios · Bonding
Debt-to-Equity
Ratio.
The debt-to-equity ratio measures how much of your business is financed by debt versus owner equity. Sureties and bankers use it to assess leverage risk — a highly leveraged construction business has less financial cushion to absorb losses and fewer options when cash gets tight. Here's what the ratio means, what thresholds matter, and how to manage it.
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SPM vs. Other CFO Firms
Most CFO Firms Serving This Trade
- High revenue minimums — most won't serve under $5M
- Advisory only — no bookkeeping, no implementation
- No job costing setup or ControlQore management
- No monthly WIP as standard deliverable
- No pricing published — discovery call required
- No vetted partner network for bonding, lending, or liens
- No prevailing wage specialty
The Construction CFO — SPM
- Serves $1M–$12M — starts at $1,900/month
- Full implementation — bookkeeping, job costing, CFO advisory
- ControlQore setup and managed for you every month
- Monthly WIP standard in Executive tier
- Full pricing published — no discovery call to find out costs
- Vetted partners for bonding, lending, lien services, payroll
- Prevailing wage and Davis-Bacon specialty
What We See in This Business
01
Equipment Financing Is Driving Your Leverage Too High
Equipment-intensive trades — civil, excavation, concrete — often carry significant equipment debt. When equipment debt is high relative to equity, the debt-to-equity ratio rises and sureties become concerned about the business's ability to absorb losses. The equipment may be generating revenue, but the leverage it creates affects how banks and sureties view financial risk.
02
Your Equity Is Low Because Profits Are Being Distributed
Every dollar distributed to owners reduces equity. Every dollar retained builds equity. Subcontractors who distribute most of their profit annually keep their equity base thin — which keeps debt-to-equity high even when debt levels aren't extraordinary. Thin equity relative to debt signals financial fragility to everyone who reviews your balance sheet.
03
You Don't Know What Your Debt-to-Equity Ratio Is
Total liabilities divided by total equity — most subcontractors haven't calculated this since their CPA mentioned it at year-end. By the time a bank or surety flags a high ratio, the decision that created it was made months ago. Monthly tracking catches drift before it becomes a problem.
How SPM Fixes It
Calculating Debt-to-Equity
Total debt equals all liabilities — current and long-term. Total equity equals total assets minus total liabilities (also shown as retained earnings plus paid-in capital on the balance sheet). Divide total debt by total equity. A ratio below 2.0 is generally healthy for most subcontractors. Above 3.0 starts to concern sureties. Above 4.0 typically creates credit and bonding constraints.
Building Equity Through Retained Earnings
The most reliable way to improve debt-to-equity is retained earnings — keeping profit in the business rather than distributing it. SPM helps Executive clients model the distribution-vs-retention decision each year: how much can be distributed while maintaining target debt-to-equity and current ratio thresholds for their bonding program and credit facility.
Monthly Debt-to-Equity Tracking
SPM calculates and reports debt-to-equity monthly for Executive clients — alongside current ratio and working capital — as part of the financial ratio dashboard. When any ratio approaches a threshold that matters for banking or bonding, it surfaces in the monthly CFO meeting with a specific recommendation before the ratio becomes a constraint rather than a warning.
Service Tiers
Tier 01
Core Financial
Starts at $1,900 / month
- ControlQore setup and management
- Job costing aligned to your estimate structure
- Cost-to-complete tracking — updated monthly
- Full-service bookkeeping — minimum 30 min/week
- Vendor payments via ACH (you approve, we initiate)
- Accounts receivable management
- Bank reconciliations and transaction matching
- Controllership
- 1 monthly CFO meeting
- 60-day onboarding — books migrated to last taxable year
Most Popular
Tier 02
Executive Financial
Starts at $2,900 / month
- Everything in Core Financial
- Monthly WIP schedule — delivered every month, standard
- 13-week cash flow forecasting
- CEO Report — monthly financial dashboard
- 3 CFO advisory meetings per month
- Strategic accountability and actionable to-dos
- Direct access to Josh Luebker
Pricing by Revenue
Revenue Range
(Last 12 Months) |
Core Financial
Monthly |
Executive Financial
Monthly |
| Under $1M | $1,900 | $2,900 |
| $1M – $3M | $2,600 | $3,600 |
| $4M – $6M | $3,800 | $5,500 |
| $7M – $9M | $5,100 | $6,900 |
| $10M – $12M | $6,100 | $8,500 |
| $13M+ | Quoted | Quoted |
Vetted Partner Network
National Lien Services
When AR gets too long, we connect you directly to our lien services partner to protect what you've earned.
Additional cost — not included in monthly fee
Payroll Integration Partners
Prevailing wage and regular payroll software partners integrated directly with ControlQore job costing.
Additional cost — not included in monthly fee
Bonding Partners
Surety relationships and bonding capacity support. We prepare the financials — our partners get you bonded.
Additional cost — not included in monthly fee
Lending Partners
Working capital lines and equipment financing through vetted lenders who understand construction.
Additional cost — not included in monthly fee
Reviewed Financials
CPA-level financial statement reviews for banking, bonding, and large contract requirements.
Additional cost — not included in monthly fee
CPA Coordination
We work alongside your existing CPA — not replacing them. Clean books and job costing make tax time easier.
Included — no extra cost
Common Questions
Straight answers.
Does equipment debt affect debt-to-equity differently than working capital debt?
Both types of debt increase total liabilities and therefore increase debt-to-equity. However, equipment debt is offset by equipment assets on the balance sheet — so the net impact on equity is limited to the difference between loan balance and equipment book value. Working capital debt (draws on a line of credit) increases liabilities without adding an offsetting asset — so it has a more direct impact on debt-to-equity. Paying down the line of credit before year-end financial statements are prepared improves the ratio meaningfully.
How does an S-Corp distribution affect debt-to-equity?
An S-Corp distribution reduces retained earnings (equity) and reduces cash (an asset). The net effect is a reduction in both assets and equity — which can increase debt-to-equity if the distribution reduces equity faster than debt is being paid down. Large Q4 distributions timed before year-end financial statements are prepared can meaningfully suppress equity at exactly the moment sureties and banks are reviewing annual financials. SPM advises on distribution timing relative to these review cycles for Executive clients.
What's included in Core Financial?
ControlQore setup, job costing aligned to your estimates, cost-to-complete tracking, full bookkeeping (minimum 30 min/week), ACH vendor payments (you approve, we initiate), AR management, bank reconciliations, transaction matching, controllership, and 1 monthly CFO meeting. Starts at $1,900/month.
What does Executive Financial add?
Everything in Core plus monthly WIP schedule, 13-week cash flow forecasting, CEO Report, and 3 CFO advisory meetings per month. Starts at $2,900/month. WIP, cash flow forecasting, and the CEO Report are Executive tier only.
Do you handle payroll?
No. We have vetted payroll software partners — including prevailing wage integrations — that connect directly with ControlQore. Those are separate engagements at additional cost.
How long does onboarding take?
60 days. We migrate your books to the start of your last taxable year, set up ControlQore, and build your job costing structure. Fully operational in two months.
What software do clients use?
ControlQore. All SPM clients run on ControlQore for job costing and WIP. We set it up and manage it — you don't have to learn it. Clients switching from QuickBooks, Sage, or other platforms migrate during onboarding.
Do you work alongside our CPA?
Yes. We work alongside your existing CPA — not replacing them. Clean books and accurate job costing make their job easier at tax time.
What happens when we grow past $12M?
We have a clear graduation path. We prepare your financials, systems, and team for the transition and connect you with the right firm for your next stage of growth.