Mercer International Inc (MERC)
Debt-to-capital ratio
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Long-term debt | US$ in thousands | 1,609,420 | 1,346,510 | 1,237,540 | 1,186,620 | 1,087,930 |
| Total stockholders’ equity | US$ in thousands | 635,410 | 838,784 | 694,024 | 601,027 | 550,403 |
| Debt-to-capital ratio | 0.72 | 0.62 | 0.64 | 0.66 | 0.66 |
December 31, 2023 calculation
Debt-to-capital ratio = Long-term debt ÷ (Long-term debt + Total stockholders’ equity)
= $1,609,420K ÷ ($1,609,420K + $635,410K)
= 0.72
The debt-to-capital ratio of Mercer International Inc. has shown a fluctuating trend over the past five years. The ratio increased from 0.67 in 2019 to 0.66 in 2020, and then further to 0.64 in 2021. However, there was a notable increase in 2022, where the ratio reached 0.62, indicating a decrease in the company's reliance on debt financing in comparison to its capital structure.
In 2023, the debt-to-capital ratio saw a significant rise to 0.72, which suggests that Mercer International Inc. became more leveraged in its financing during that year. It is important to note that a higher debt-to-capital ratio could signify increased financial risk for the company, as a higher proportion of debt in the capital structure implies higher interest payments and potential repayment obligations.
Overall, Mercer International Inc. should closely monitor and manage its debt levels to ensure a healthy balance between debt and equity financing, taking into account the impact on its financial stability and risk profile.