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.