Hillenbrand Inc (HI)
Debt-to-assets ratio
| Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | ||
|---|---|---|---|---|---|---|
| Long-term debt | US$ in thousands | 1,990,400 | 1,222,100 | 1,212,900 | 1,516,300 | 619,500 |
| Total assets | US$ in thousands | 5,547,700 | 3,867,500 | 4,014,900 | 3,987,400 | 2,228,600 |
| Debt-to-assets ratio | 0.36 | 0.32 | 0.30 | 0.38 | 0.28 |
September 30, 2023 calculation
Debt-to-assets ratio = Long-term debt ÷ Total assets
= $1,990,400K ÷ $5,547,700K
= 0.36
The debt-to-assets ratio, also known as the leverage ratio, measures the proportion of a company's assets that are financed by debt. It is calculated by dividing a company's total debt by its total assets. A higher debt-to-assets ratio indicates that a larger portion of a company's assets is financed by debt, implying higher financial risk.
Based on the provided data for Hillenbrand Inc, the trend in the debt-to-assets ratio over the past five years demonstrates some fluctuations. In 2023, the ratio increased to 0.36 from 0.32 in 2022, indicating that the company's reliance on debt to finance its assets has risen. This increase may suggest a potential increase in financial risk as a larger portion of the company's assets is being funded by debt.
Comparing the 2023 ratio to historical trends, we observe that it's higher than the 2021 and 2019 ratios, but lower than the 2020 ratio. This indicates that while the current ratio is higher than the recent past, it is not the highest observed over the five-year period.
The increase in the debt-to-assets ratio can be interpreted as a signal of increased leverage, which could potentially enhance the company's returns but may also heighten financial risk, especially in periods of economic uncertainty or rising interest rates.
It's important to note that a higher debt-to-assets ratio is not necessarily negative, as it can also indicate effective utilization of leverage to generate higher returns for shareholders. However, close monitoring of the trend and comparison to industry and peer benchmarks is essential in understanding the company's financial risk and overall capital structure.
Peer comparison
Sep 30, 2023