Costco Wholesale Corp (COST)

Debt-to-equity ratio

		Sep 3, 2023	Aug 28, 2022	Aug 29, 2021	Aug 30, 2020	Sep 1, 2019
Long-term debt	US$ in thousands	5,377,000	6,484,000	6,692,000	7,514,000	5,124,000
Total stockholders’ equity	US$ in thousands	25,058,000	20,642,000	17,564,000	18,284,000	15,243,000
Debt-to-equity ratio		0.21	0.31	0.38	0.41	0.34

September 3, 2023 calculation

Debt-to-equity ratio = Long-term debt ÷ Total stockholders’ equity
= $5,377,000K ÷ $25,058,000K
= 0.21

The debt-to-equity ratio measures the proportion of a company's financing that comes from creditors compared to shareholders. Costco Wholesale Corp's debt-to-equity ratio has displayed a declining trend over the past five years, indicating a conservative approach to financing its operations.

As of September 3, 2023, the company's debt-to-equity ratio stands at 0.26, showcasing a decrease from the previous year's 0.32. This suggests that Costco Wholesale Corp relies more on equity financing than debt to fund its operations, which may indicate a lower financial risk.

The decreasing trend in the debt-to-equity ratio over the years demonstrates the company's effective management of its capital structure and a potential ability to weather economic downturns. It also reflects positively on the company's ability to generate sufficient internal funds to support its growth without resorting to excessive debt.

Overall, the declining debt-to-equity ratio of Costco Wholesale Corp suggests a prudent financial strategy and a strong position in effectively managing its liabilities relative to shareholder equity.