MSC Industrial Direct Company Inc (MSM)
Debt-to-capital ratio
| Sep 2, 2023 | Sep 3, 2022 | Aug 28, 2021 | Aug 29, 2020 | Aug 31, 2019 | ||
|---|---|---|---|---|---|---|
| Long-term debt | US$ in thousands | 224,165 | 468,728 | 582,428 | 494,565 | 264,225 |
| Total stockholders’ equity | US$ in thousands | 1,479,160 | 1,350,430 | 1,150,870 | 1,314,940 | 1,478,550 |
| Debt-to-capital ratio | 0.13 | 0.26 | 0.34 | 0.27 | 0.15 |
September 2, 2023 calculation
Debt-to-capital ratio = Long-term debt ÷ (Long-term debt + Total stockholders’ equity)
= $224,165K ÷ ($224,165K + $1,479,160K)
= 0.13
The debt-to-capital ratio is a financial metric that helps in evaluating a company's financial leverage by comparing its total debt to its total capital, which includes both debt and equity. A lower debt-to-capital ratio typically indicates lower financial risk and greater financial stability.
Based on the provided data for MSC Industrial Direct Co., Inc., we observe the trend of the debt-to-capital ratio over the past five years:
- September 2, 2023: 0.23
- September 3, 2022: 0.37
- August 28, 2021: 0.41
- August 29, 2020: 0.32
- August 31, 2019: 0.23
The decreasing trend in the debt-to-capital ratio from 0.41 in 2021 to 0.23 in 2023 is a positive indication. It suggests that the company has been reducing its reliance on debt in relation to its overall capital structure over the years.
This downward trend in the debt-to-capital ratio reflects an improvement in the company's financial risk profile and capital structure. It indicates that the company is making efforts to decrease its debt levels in comparison to its total capital, which can enhance its financial flexibility and resilience, particularly during economic downturns or challenging business conditions.
This positive trend could be interpreted as a sign of prudent financial management, potentially enhancing the company's ability to invest in growth opportunities, withstand economic uncertainties, and meet its debt obligations without excessive financial strain.
Overall, the decreasing trend in the debt-to-capital ratio for MSC Industrial Direct Co., Inc. suggests that the company has been effectively managing its debt and capital structure, positioning itself for potential financial stability and flexibility in the future.
Peer comparison
Sep 2, 2023