Lennar Corporation (LEN)
Debt-to-capital ratio
| Nov 30, 2023 | Nov 30, 2022 | Nov 30, 2021 | Nov 30, 2020 | Nov 30, 2019 | ||
|---|---|---|---|---|---|---|
| Long-term debt | US$ in thousands | — | — | — | — | — |
| Total stockholders’ equity | US$ in thousands | 26,580,700 | 24,100,500 | 20,816,400 | 17,994,900 | 15,949,500 |
| Debt-to-capital ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
November 30, 2023 calculation
Debt-to-capital ratio = Long-term debt ÷ (Long-term debt + Total stockholders’ equity)
= $—K ÷ ($—K + $26,580,700K)
= 0.00
The debt-to-capital ratio is a key financial metric used to evaluate a company's leverage and solvency. Lennar Corp.'s debt-to-capital ratio has shown a declining trend over the past five years, indicating improved financial health and decreased reliance on debt financing.
In 2019, the ratio was at its highest at 0.38, signifying that 38% of the company's capital was funded by debt. However, since then, there has been a consistent reduction in this ratio, with it reaching 0.16 in November 2023. This suggests that Lennar Corp. has been able to decrease its proportion of debt in relation to its total capital, which may reflect improved operational efficiency and a stronger financial position.
A declining debt-to-capital ratio generally indicates a lower financial risk for the company, as it implies a reduced dependency on debt to fund its operations and investments. It can also suggest a company's ability to generate sufficient cash flows to meet its financial obligations without relying heavily on external borrowing. However, it is important to consider that a very low debt-to-capital ratio could also indicate underutilization of debt which may limit financial flexibility for potential growth opportunities.
Overall, the consistent decline in Lennar Corp.'s debt-to-capital ratio over the past five years signals a positive financial transformation towards a more sustainable capital structure with lower leverage.
Peer comparison
Nov 30, 2023