AutoZone Inc (AZO)

Debt-to-capital ratio

		Feb 10, 2024	Nov 18, 2023	Aug 26, 2023	May 6, 2023	Feb 11, 2023	Nov 19, 2022	Aug 27, 2022	May 7, 2022	Feb 12, 2022	Nov 20, 2021	Aug 28, 2021	May 8, 2021	Feb 13, 2021	Nov 21, 2020	Aug 29, 2020	May 9, 2020	Nov 23, 2019	Aug 31, 2019	May 4, 2019	Feb 9, 2019
Long-term debt	US$ in thousands	8,630,550	8,583,520	7,668,550	7,340,480	7,042,300	6,328,340	6,122,090	6,057,440	5,840,880	4,771,270	5,269,820	5,267,900	5,266,400	5,514,870	5,513,370	5,418,270	5,287,320	5,206,340	5,151,920	5,111,200
Total stockholders’ equity	US$ in thousands	-4,837,320	-5,213,670	-4,349,890	-4,301,580	-4,184,170	-3,837,920	-3,538,910	-3,387,230	-3,137,480	-2,124,750	-1,797,540	-1,763,390	-1,523,570	-1,026,980	-877,977	-1,632,740	-1,776,090	-1,713,850	-1,589,510	-1,594,360
Debt-to-capital ratio		2.28	2.55	2.31	2.42	2.46	2.54	2.37	2.27	2.16	1.80	1.52	1.50	1.41	1.23	1.19	1.43	1.51	1.49	1.45	1.45

February 10, 2024 calculation

Debt-to-capital ratio = Long-term debt ÷ (Long-term debt + Total stockholders’ equity)
= $8,630,550K ÷ ($8,630,550K + $-4,837,320K)
= 2.28

The debt-to-capital ratio of AutoZone Inc has shown fluctuations over the past years, ranging from a high of 2.55 in November 2023 to a low of 1.19 in August 2020. This ratio indicates the proportion of a company's total debt to its total capital, which includes both debt and equity.

The increasing trend in the debt-to-capital ratio from 2019 to 2023 suggests that the company has been relying more on debt to finance its operations compared to equity. This could be a strategy to fuel growth, fund investments, or take advantage of favorable borrowing conditions.

However, it is important to note that a high debt-to-capital ratio can indicate a higher financial risk as the company may struggle to meet its debt obligations if its earnings decline. On the other hand, a lower ratio may suggest a more conservative financial structure with less reliance on debt financing.

Overall, AutoZone Inc's management should carefully monitor the debt-to-capital ratio and ensure it is within manageable levels to maintain financial stability and flexibility in the long term.