Ciena Corp (CIEN)
Debt-to-capital ratio
| Oct 28, 2023 | Oct 29, 2022 | Oct 30, 2021 | Oct 31, 2020 | Oct 31, 2017 | ||
|---|---|---|---|---|---|---|
| Long-term debt | US$ in thousands | 1,543,410 | 1,061,120 | 670,355 | 676,356 | 583,688 |
| Total stockholders’ equity | US$ in thousands | 2,848,360 | 2,712,860 | 3,020,020 | 2,509,600 | 2,136,340 |
| Debt-to-capital ratio | 0.35 | 0.28 | 0.18 | 0.21 | 0.21 |
October 28, 2023 calculation
Debt-to-capital ratio = Long-term debt ÷ (Long-term debt + Total stockholders’ equity)
= $1,543,410K ÷ ($1,543,410K + $2,848,360K)
= 0.35
The debt-to-capital ratio of CIENA Corp. is a significant financial metric that provides insights into the company's capital structure and financial leverage. This ratio measures the proportion of a company's capital that is contributed by debt. A higher debt-to-capital ratio indicates a greater reliance on debt financing, which can lead to increased financial risk and interest expenses.
Analyzing the trend in CIENA Corp.'s debt-to-capital ratio over the past five years, we observe an increasing trend from 0.20 in 2019 to 0.36 in 2023. This signifies that the company has been shifting towards a higher proportion of debt in its capital structure over the years.
The rise in the debt-to-capital ratio may indicate that CIENA Corp. has been using more debt to finance its operations, investments, or expansion. While debt can provide tax advantages and boost returns on equity, it also comes with the burden of interest payments and potential financial vulnerability in times of economic downturns or high-interest rate environments.
The increase in the debt-to-capital ratio should prompt stakeholders and investors to closely monitor the company's ability to service its debt obligations and manage financial risks. Additionally, it would be prudent to assess the company's strategies for utilizing debt and evaluate the impact on its overall financial health and stability.
In conclusion, the rising trend in CIENA Corp.'s debt-to-capital ratio suggests an evolving capital structure with a growing reliance on debt. This warrants a thorough examination of the company's financial risk management and the potential implications on its long-term financial performance and stability.
Peer comparison
Oct 28, 2023