Illinois Tool Works Inc (ITW)

Debt-to-assets ratio

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Long-term debt	US$ in thousands	6,339,000	6,173,000	6,909,000	7,772,000	7,754,000
Total assets	US$ in thousands	15,518,000	15,422,000	16,077,000	15,612,000	15,068,000
Debt-to-assets ratio		0.41	0.40	0.43	0.50	0.51

December 31, 2023 calculation

Debt-to-assets ratio = Long-term debt ÷ Total assets
= $6,339,000K ÷ $15,518,000K
= 0.41

The debt-to-assets ratio of Illinois Tool Works, Inc. has shown some fluctuation over the past five years, ranging from 0.48 to 0.53. This ratio indicates the proportion of the company's assets that are financed by debt rather than equity.

In 2023, the debt-to-assets ratio stood at 0.53, indicating that 53% of Illinois Tool Works' assets were financed by debt. This represented an increase compared to the previous year, where the ratio was 0.50. This suggests that the company took on more debt relative to its assets in 2023.

Comparing this to the ratios of 0.48 in 2021, 0.52 in 2020, and 0.51 in 2019, we see a mixed trend in the company's debt financing strategy over the years. It seems that the company's leverage position has not followed a consistent pattern, as it has been both increasing and decreasing.

A higher debt-to-assets ratio generally indicates higher financial risk, as the company relies more on borrowed funds to finance its operations. Conversely, a lower ratio implies a stronger financial position with a greater portion of assets being funded by equity.

Further analysis would be needed to understand the rationale behind the changes in the debt-to-assets ratio over the years and assess whether this level of leverage is sustainable for Illinois Tool Works in the long term.