Polaris Industries Inc (PII)
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 | 1,954,300 | 1,504,200 | 1,247,400 | 1,308,600 | 1,526,800 |
| Total stockholders’ equity | US$ in thousands | 1,418,400 | 1,099,000 | 1,224,300 | 1,144,800 | 1,108,200 |
| Debt-to-capital ratio | 0.58 | 0.58 | 0.50 | 0.53 | 0.58 |
December 31, 2023 calculation
Debt-to-capital ratio = Long-term debt ÷ (Long-term debt + Total stockholders’ equity)
= $1,954,300K ÷ ($1,954,300K + $1,418,400K)
= 0.58
The debt-to-capital ratio of Polaris Inc has fluctuated over the past five years, ranging from 0.56 in 2020 to 0.65 in 2022. The ratio measures the proportion of the company's total debt to its total capital, which includes both debt and equity. A higher ratio indicates that a larger portion of the company's capital structure is financed by debt, which can increase financial risk but provide tax advantages.
In 2023, the debt-to-capital ratio decreased to 0.57, suggesting a lower reliance on debt financing compared to the previous year. This could be a positive sign as it indicates improved financial stability and lower risk exposure to debt obligations. However, it is essential to consider the reasons behind this change, such as paying off debt, issuing more equity, or changes in the business operations that impact the capital structure.
Overall, monitoring the debt-to-capital ratio over time can help assess the company's leverage and financial health. A downward trend may indicate a more conservative approach to capital structure and lower financial risk, while an upward trend could signal increased debt dependency and potentially higher financial risk for Polaris Inc.