O’Reilly Automotive Inc (ORLY)

Debt-to-capital ratio

		Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Long-term debt	US$ in thousands	5,570,120	5,102,350	4,873,700	4,927,680	4,371,650	4,370,770	4,669,830	3,827,890	3,826,980	3,826,070	3,825,180	3,824,290	4,123,220	4,122,420	4,127,400	4,471,250	3,890,530	3,703,630	3,783,740	3,460,920
Total stockholders’ equity	US$ in thousands	-1,739,280	-1,760,470	-1,627,470	-1,625,020	-1,060,750	-1,205,460	-1,107,430	-328,273	-66,423	-140,853	217,694	-6,977	140,258	709,225	589,100	108,844	397,340	166,219	144,682	372,365
Debt-to-capital ratio		1.45	1.53	1.50	1.49	1.32	1.38	1.31	1.09	1.02	1.04	0.95	1.00	0.97	0.85	0.88	0.98	0.91	0.96	0.96	0.90

December 31, 2023 calculation

Debt-to-capital ratio = Long-term debt ÷ (Long-term debt + Total stockholders’ equity)
= $5,570,120K ÷ ($5,570,120K + $-1,739,280K)
= 1.45

The debt-to-capital ratio of O`Reilly Automotive, Inc. has exhibited a fluctuating trend over the past eight quarters. The ratio has generally been on an upward trajectory, reaching a peak of 1.53 in Q3 2023 before slightly decreasing to 1.45 in Q4 2023. This indicates that the company's level of debt relative to its total capital has been increasing over time, suggesting a higher reliance on debt financing in its capital structure.

The highest debt-to-capital ratio observed in Q3 2023 may raise some concerns about the company's leverage and financial risk, as it indicates that a significant portion of O`Reilly Automotive's capital structure is comprised of debt. However, the subsequent decrease in the ratio in Q4 2023 may indicate a potential effort to deleverage or a shift in the company's financing strategy.

Overall, O`Reilly Automotive's debt-to-capital ratio analysis suggests that the company has been progressively taking on more debt in relation to its total capital, which could impact its financial flexibility and solvency in the long term. Investors and stakeholders may need to closely monitor these trends to assess the company's ability to manage its debt obligations effectively.