Planet Fitness Inc (PLNT)
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 | 1,962,870 | 1,978,130 | 1,740,270 | 1,751,430 | 1,687,500 |
| Total stockholders’ equity | US$ in thousands | -115,649 | -199,012 | -645,355 | -705,869 | -706,455 |
| Debt-to-capital ratio | 1.06 | 1.11 | 1.59 | 1.68 | 1.72 |
December 31, 2023 calculation
Debt-to-capital ratio = Long-term debt ÷ (Long-term debt + Total stockholders’ equity)
= $1,962,870K ÷ ($1,962,870K + $-115,649K)
= 1.06
The debt-to-capital ratio of Planet Fitness Inc has exhibited a decreasing trend from 1.71 in 2019 to 1.06 in 2023. This ratio measures the proportion of the company's total debt to its total capital (debt and equity), indicating the extent to which debt is used to finance its operations. A higher ratio implies a greater reliance on debt financing, which can increase financial risk but also potentially enhance returns.
The declining trend in the debt-to-capital ratio suggests that Planet Fitness Inc has been reducing its reliance on debt over the years, which could indicate a more conservative financial strategy or improved financial health. By decreasing the proportion of debt in its capital structure, the company may be reducing its financial risk and improving its ability to meet its debt obligations in the long term.
It is important to note that while a decreasing debt-to-capital ratio can be a positive sign, a low ratio could also indicate underleveraging, potentially missing out on opportunities for growth or tax benefits associated with debt financing. Therefore, a balanced approach to debt management is crucial for optimizing the company's capital structure and financial performance.