WW Grainger Inc (GWW)
Debt-to-capital ratio
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Long-term debt | US$ in thousands | 2,266,000 | 2,260,000 | 2,275,000 | 2,278,000 | 2,284,000 | 2,294,000 | 2,309,000 | 2,338,000 | 2,362,000 | 2,372,000 | 2,375,000 | 2,373,000 | 2,389,000 | 2,388,000 | 3,301,000 | 3,303,000 | 1,914,000 | 1,918,000 | 2,080,000 | 2,077,000 |
| Total stockholders’ equity | US$ in thousands | 3,115,000 | 3,090,000 | 2,935,000 | 2,735,000 | 2,440,000 | 2,308,000 | 2,201,000 | 2,081,000 | 1,874,000 | 1,827,000 | 1,868,000 | 1,816,000 | 1,828,000 | 2,131,000 | 1,929,000 | 1,810,000 | 1,855,000 | 1,871,000 | 1,923,000 | 1,971,000 |
| Debt-to-capital ratio | 0.42 | 0.42 | 0.44 | 0.45 | 0.48 | 0.50 | 0.51 | 0.53 | 0.56 | 0.56 | 0.56 | 0.57 | 0.57 | 0.53 | 0.63 | 0.65 | 0.51 | 0.51 | 0.52 | 0.51 |
December 31, 2023 calculation
Debt-to-capital ratio = Long-term debt ÷ (Long-term debt + Total stockholders’ equity)
= $2,266,000K ÷ ($2,266,000K + $3,115,000K)
= 0.42
The debt-to-capital ratio of W.W. Grainger Inc. has shown a declining trend over the past eight quarters, indicating a decreasing reliance on debt financing relative to total capital employed. The ratio has decreased from 0.53 in Q1 2022 to 0.42 in Q4 2023. This suggests that the company has been gradually reducing its debt burden or increasing its equity base relative to total capital.
A lower debt-to-capital ratio generally signifies lower financial risk and greater financial stability, as it indicates a smaller proportion of debt in the company's capital structure. This can enhance the company's ability to weather economic downturns and potentially lower its cost of capital.
However, it's important to note that an extremely low debt-to-capital ratio may also imply underutilization of debt financing, which could limit the company's ability to leverage its capital structure for growth opportunities. Thus, a moderate and balanced approach to debt management is crucial for maintaining financial health and optimizing capital structure efficiency.