Edison International (EIX)
Debt-to-equity ratio
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Long-term debt | US$ in thousands | 30,316,000 | 27,025,000 | 24,170,000 | 19,632,000 | 17,864,000 |
| Total stockholders’ equity | US$ in thousands | 15,501,000 | 15,621,000 | 15,888,000 | 14,048,000 | 15,496,000 |
| Debt-to-equity ratio | 1.96 | 1.73 | 1.52 | 1.40 | 1.15 |
December 31, 2023 calculation
Debt-to-equity ratio = Long-term debt ÷ Total stockholders’ equity
= $30,316,000K ÷ $15,501,000K
= 1.96
The debt-to-equity ratio of Edison International has shown an increasing trend over the past five years, signaling a higher level of financial leverage. The ratio has increased from 1.42 in 2019 to 2.20 in 2023. This indicates that the company has been relying more on debt financing relative to equity financing over the years.
A higher debt-to-equity ratio implies that the company is utilizing more debt to finance its operations and growth, which can potentially lead to higher financial risk. Investors and lenders often use this ratio to assess a company's financial health and its ability to meet its debt obligations.
While a higher debt-to-equity ratio can amplify returns on equity when the company generates higher profits, it also increases the company's vulnerability to economic downturns or interest rate fluctuations. It is crucial for Edison International to closely monitor its debt levels and ensure that it can manage its debt obligations effectively to maintain financial stability.
Peer comparison
Dec 31, 2023