Illinois Tool Works Inc (ITW)
Debt-to-equity 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 | 6,339,000 | 6,818,000 | 6,947,000 | 5,510,000 | 6,173,000 | 5,940,000 | 6,115,000 | 6,817,000 | 6,909,000 | 8,451,000 | 8,649,000 | 8,880,000 | 7,772,000 | 9,151,000 | 8,816,000 | 8,199,000 | 7,754,000 | 8,582,000 | 8,542,000 | 7,201,000 |
| Total stockholders’ equity | US$ in thousands | 3,012,000 | 3,003,000 | 3,093,000 | 3,100,000 | 3,088,000 | 3,013,000 | 3,378,000 | 3,581,000 | 3,625,000 | 3,492,000 | 3,520,000 | 3,274,000 | 3,181,000 | 2,696,000 | 2,357,000 | 2,283,000 | 3,026,000 | 2,966,000 | 3,091,000 | 3,196,000 |
| Debt-to-equity ratio | 2.10 | 2.27 | 2.25 | 1.78 | 2.00 | 1.97 | 1.81 | 1.90 | 1.91 | 2.42 | 2.46 | 2.71 | 2.44 | 3.39 | 3.74 | 3.59 | 2.56 | 2.89 | 2.76 | 2.25 |
December 31, 2023 calculation
Debt-to-equity ratio = Long-term debt ÷ Total stockholders’ equity
= $6,339,000K ÷ $3,012,000K
= 2.10
Illinois Tool Works, Inc.'s debt-to-equity ratio has exhibited a gradual upward trend over the past eight quarters, reaching 2.71 in Q4 2023 from 2.19 in Q1 2022. This indicates that the company relies more on debt financing compared to equity to fund its operations and growth initiatives. The ratio has been consistently above 2, suggesting a relatively high level of debt in relation to equity within the company's capital structure.
The variability of the debt-to-equity ratio over the quarters may reflect changes in the company's borrowing activities, repayment schedules, or equity levels. The increase in the ratio could potentially signal increased financial leverage and enhanced risk due to the higher proportion of debt used to finance operations.
It is essential for stakeholders to monitor this ratio closely, as a high debt-to-equity ratio may indicate financial distress, reduced financial flexibility, and heightened vulnerability to economic downturns or interest rate fluctuations. Illinois Tool Works, Inc. should continue to assess its capital structure and debt management strategies to maintain a healthy balance between debt and equity financing.
Peer comparison
Dec 31, 2023