Pinnacle West Capital Corp (PNW)

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	7,540,620	7,741,290	6,913,740	6,314,270	4,832,560
Total stockholders’ equity	US$ in thousands	6,177,660	6,048,650	5,906,200	5,633,500	5,430,650
Debt-to-equity ratio		1.22	1.28	1.17	1.12	0.89

December 31, 2023 calculation

Debt-to-equity ratio = Long-term debt ÷ Total stockholders’ equity
= $7,540,620K ÷ $6,177,660K
= 1.22

The trend in Pinnacle West Capital Corp.'s debt-to-equity ratio over the past five years indicates an increasing level of leverage. The ratio has been progressively rising from 1.06 in 2019 to 1.46 in 2023. This suggests that the company is relying more on debt financing relative to equity financing over time.

A debt-to-equity ratio of 1.46 in 2023 indicates that for every dollar of equity, the company has $1.46 in debt. This implies a higher financial risk, as a higher ratio suggests a greater reliance on borrowed funds to finance its operations and investments.

Investors and creditors may view this trend as a cause for concern, as it indicates a potentially higher financial risk for the company. It would be important for the company to closely monitor its debt levels and ensure that it can effectively manage its debt obligations to maintain financial stability and sustainability.