MillerKnoll Inc (MLKN)
Debt-to-capital ratio
| Jun 3, 2023 | May 28, 2022 | May 29, 2021 | May 30, 2020 | Jun 1, 2019 | ||
|---|---|---|---|---|---|---|
| Long-term debt | US$ in thousands | 1,365,100 | 1,379,200 | 274,900 | 539,900 | 281,900 |
| Total stockholders’ equity | US$ in thousands | 1,432,600 | 1,427,100 | 860,500 | 652,400 | 719,200 |
| Debt-to-capital ratio | 0.49 | 0.49 | 0.24 | 0.45 | 0.28 |
June 3, 2023 calculation
Debt-to-capital ratio = Long-term debt ÷ (Long-term debt + Total stockholders’ equity)
= $1,365,100K ÷ ($1,365,100K + $1,432,600K)
= 0.49
The debt-to-capital ratio measures a company's financial leverage by comparing its total debt to its total capital, which is the sum of debt and equity. A higher ratio indicates a higher reliance on debt to finance operations, while a lower ratio suggests a stronger equity position.
Looking at the trend in MillerKnoll Inc's debt-to-capital ratio over the past five years, we can observe fluctuations in the ratio. In 2019, the company had a relatively low debt-to-capital ratio of 0.28, indicating a stronger equity position compared to debt. However, in 2020, the ratio increased to 0.48, signaling a higher reliance on debt to finance the business. This could be indicative of an increase in borrowing or a decrease in equity during that year.
The ratio decreased to 0.25 in 2021, suggesting a significant improvement in the company's financial structure, with a lower proportion of debt relative to total capital. This could be due to either a reduction in debt or an increase in equity.
In 2022 and 2023, the debt-to-capital ratio remained relatively stable at 0.50 and 0.49, respectively. This suggests that the company's capital structure has maintained a consistent balance between debt and equity over these two years.
Overall, the trend in MillerKnoll Inc's debt-to-capital ratio indicates fluctuations in the company's leverage and financial structure over the past five years. It is essential to assess the factors driving these changes in the ratio to evaluate the company's financial risk and stability.