Lindsay Corporation (LNN)
Debt-to-equity ratio
| Aug 31, 2023 | Aug 31, 2022 | Aug 31, 2021 | Aug 31, 2020 | Aug 31, 2019 | ||
|---|---|---|---|---|---|---|
| Long-term debt | US$ in thousands | 115,164 | 115,341 | 115,514 | 115,682 | 115,846 |
| Total stockholders’ equity | US$ in thousands | 455,651 | 393,358 | 338,445 | 298,518 | 268,209 |
| Debt-to-equity ratio | 0.25 | 0.29 | 0.34 | 0.39 | 0.43 |
August 31, 2023 calculation
Debt-to-equity ratio = Long-term debt ÷ Total stockholders’ equity
= $115,164K ÷ $455,651K
= 0.25
The debt-to-equity ratio is a financial metric that provides insight into a company's leverage, or the extent to which it is relying on debt versus equity to finance its assets. A lower debt-to-equity ratio generally indicates less financial risk, as it suggests that a company is relying more on equity financing rather than debt financing.
Looking at the data provided for Lindsay Corporation's debt-to-equity ratio over the past five years, we can observe a consistent trend. The ratio has been decreasing steadily from 0.43 in 2019 to 0.25 in 2023. This downward trend indicates that the company has been gradually reducing its reliance on debt in comparison to equity, which can be a positive sign for investors and creditors.
The decreasing debt-to-equity ratio suggests that Lindsay Corporation has been effectively managing its capital structure, potentially reducing its financial risk and enhancing its financial flexibility. Lower leverage can also indicate that the company may have improved access to financing at favorable terms, as it is seen as less risky by lenders.
However, it's important to note that a low debt-to-equity ratio does not necessarily mean that a company is in a better financial position, as it may also indicate underutilization of debt financing and potential missed opportunities for leveraging growth. It's crucial for investors and analysts to consider the industry norms and the company's specific circumstances when evaluating the significance of the debt-to-equity ratio.
In conclusion, based on the historical data provided, Lindsay Corporation's decreasing debt-to-equity ratio signifies a reduction in its reliance on debt financing relative to equity. This trend suggests a positive shift in the company's capital structure, potentially reducing financial risk and enhancing its financial stability. However, a thorough analysis of the company's overall financial health and strategy would be necessary to make definitive conclusions about the implications of this trend.
Peer comparison
Aug 31, 2023