Otter Tail Corporation (OTTR)

Debt-to-equity ratio

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Long-term debt	US$ in thousands	824,059	823,821	734,014	624,432	689,581
Total stockholders’ equity	US$ in thousands	1,443,010	1,217,320	990,777	870,966	781,482
Debt-to-equity ratio		0.57	0.68	0.74	0.72	0.88

December 31, 2023 calculation

Debt-to-equity ratio = Long-term debt ÷ Total stockholders’ equity
= $824,059K ÷ $1,443,010K
= 0.57

The debt-to-equity ratio of Otter Tail Corporation has exhibited a fluctuating trend over the past five years. From 2019 to 2023, the ratio has ranged between 0.63 and 0.97. A higher debt-to-equity ratio indicates that the company relies more on debt financing relative to equity, which may imply increased financial risk.

The decreasing trend from 2020 to 2023, where the ratio dropped from 0.97 to 0.63, suggests that Otter Tail Corporation has been reducing its reliance on debt in comparison to equity for financing its operations and investments. This could represent a positive sign, as lower debt levels generally indicate a more conservative financial structure and reduced vulnerability to economic downturns or interest rate fluctuations.

Overall, the declining debt-to-equity ratio of Otter Tail Corporation from 2020 to 2023 indicates a potential improvement in its financial risk profile and a shift towards a more balanced capital structure. However, it would be important to assess the reasons behind this trend and monitor future changes in the ratio to evaluate the company's ongoing financial health and risk management strategies.