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.