MGE Energy Inc (MGEE)
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 | 718,822 | 585,246 | 614,211 | 519,303 | 523,741 |
| Total stockholders’ equity | US$ in thousands | 1,140,070 | 1,081,670 | 1,027,470 | 976,000 | 855,676 |
| Debt-to-capital ratio | 0.39 | 0.35 | 0.37 | 0.35 | 0.38 |
December 31, 2023 calculation
Debt-to-capital ratio = Long-term debt ÷ (Long-term debt + Total stockholders’ equity)
= $718,822K ÷ ($718,822K + $1,140,070K)
= 0.39
The debt-to-capital ratio of MGE Energy Inc has fluctuated over the past five years, ranging from 0.35 to 0.39. This ratio indicates the proportion of the company's capital that is funded by debt relative to total capital. In general, a higher debt-to-capital ratio suggests a higher level of financial leverage and potential risk, as more of the company's operations are financed by debt.
The increase in the debt-to-capital ratio from 0.35 in 2022 to 0.39 in 2023 may indicate that MGE Energy Inc has taken on more debt relative to its total capital. This could be a strategic decision to access capital for expansion or investment opportunities. However, investors and stakeholders should closely monitor the company's debt levels and assess its ability to service the debt obligations, particularly in relation to its profitability and cash flow generation.
On the other hand, the fluctuations in the ratio over the years suggest some variability in the company's capital structure and financing decisions. It is important for MGE Energy Inc to strike a balance between debt and equity to optimize its cost of capital and financial stability. Overall, the debt-to-capital ratio provides insights into the company's leverage position and financial risk profile, which can help stakeholders make informed investment decisions.