Compass Minerals International Inc (CMP)

Debt-to-equity ratio

		Sep 30, 2023	Sep 30, 2022	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Long-term debt	US$ in thousands	800,300	947,600	1,299,100	1,285,900	1,321,200
Total stockholders’ equity	US$ in thousands	521,000	256,400	378,300	517,700	540,200
Debt-to-equity ratio		1.54	3.70	3.43	2.48	2.45

September 30, 2023 calculation

Debt-to-equity ratio = Long-term debt ÷ Total stockholders’ equity
= $800,300K ÷ $521,000K
= 1.54

The debt-to-equity ratio measures a company's financial leverage by comparing its total debt to its shareholders' equity. A high ratio indicates that a company is financing its operations primarily through debt, while a low ratio suggests a conservative approach with more reliance on equity to finance its operations.

Looking at the historical trend of Compass Minerals International Inc's debt-to-equity ratio, we observe a fluctuating pattern.

As of September 30, 2023, the debt-to-equity ratio stands at 1.56. This represents a significant decrease from the ratio of 3.70 reported on September 30, 2022. The substantial decline in the ratio indicates a reduction in the company's reliance on debt to finance its operations and a potential strengthening of its equity position.

Comparing the recent ratio to the earlier figures, we note that the ratio was 3.46 as of December 31, 2020, 2.67 as of December 31, 2019, and 2.53 as of December 31, 2018. It is evident that the company's debt-to-equity ratio has experienced fluctuations over the past years, with periods of both increase and decrease.

The trend suggests that the company may have actively managed its capital structure, possibly deleveraging its balance sheet by reducing debt levels or increasing equity. This could be indicative of the company's efforts to strengthen its financial position, reduce interest expenses, and enhance its ability to withstand economic downturns.

However, while the recent decrease in the ratio indicates a positive shift towards a lower reliance on debt, it would be important to further examine the reasons behind this change. It's crucial to assess the company's overall financial health, including its ability to generate sufficient cash flows and the impact of changes in interest rates on its cost of debt.

In conclusion, the fluctuating trend of Compass Minerals International Inc's debt-to-equity ratio suggests a dynamic approach to capital structure management. The recent decrease in the ratio portrays a potential improvement in the company's leverage position, but a comprehensive analysis of its financial performance and risk factors is necessary to better understand the implications of this trend.