Diodes Incorporated (DIOD)

Debt-to-capital ratio

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Long-term debt	US$ in thousands	16,979	147,470	265,574	288,179	64,401
Total stockholders’ equity	US$ in thousands	1,740,740	1,513,640	1,237,240	963,820	1,106,420
Debt-to-capital ratio		0.01	0.09	0.18	0.23	0.06

December 31, 2023 calculation

Debt-to-capital ratio = Long-term debt ÷ (Long-term debt + Total stockholders’ equity)
= $16,979K ÷ ($16,979K + $1,740,740K)
= 0.01

Diodes, Inc.'s debt-to-capital ratio has shown fluctuations over the past five years. The ratio has decreased steadily from 0.32 in 2020 to 0.03 in 2023, indicating a significant reduction in the proportion of debt relative to the total capital structure. This downward trend suggests that the company has been effectively managing its debt levels and/or increasing its equity base.

The lower debt-to-capital ratio in 2023 implies that Diodes, Inc. relies less on debt financing and has a stronger capital position. This may be seen as a positive sign by investors and creditors as lower debt levels generally indicate lower financial risk and greater financial stability.

It is important to note that a very low debt-to-capital ratio, such as 0.03 in 2023, could also indicate an overly conservative financial strategy, where the company might be missing out on growth opportunities that could be funded through debt. Therefore, while a decreasing debt-to-capital ratio is generally favorable, it is essential for Diodes, Inc. to strike a balance between debt and equity financing to optimize its capital structure for sustainable growth and profitability.