Sonic Automotive Inc (SAH)

Debt-to-capital ratio

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Long-term debt	US$ in thousands	1,511,900	1,616,500	1,672,200	1,510,700	651,800
Total stockholders’ equity	US$ in thousands	1,062,300	891,900	895,200	1,076,400	814,800
Debt-to-capital ratio		0.59	0.64	0.65	0.58	0.44

December 31, 2024 calculation

Debt-to-capital ratio = Long-term debt ÷ (Long-term debt + Total stockholders’ equity)
= $1,511,900K ÷ ($1,511,900K + $1,062,300K)
= 0.59

The debt-to-capital ratio of Sonic Automotive Inc has shown an upward trend over the past five years, increasing from 0.44 as of December 31, 2020, to 0.59 as of December 31, 2024. This indicates that the company's reliance on debt relative to its total capital has been growing. The ratio exceeding 0.5 suggests that more than half of the company's capital structure is funded by debt.

While an increase in the debt-to-capital ratio can potentially indicate higher financial risk and cost of debt financing, it may also suggest that the company is leveraging debt to fund growth opportunities or strategic investments. Investors and creditors closely monitor this ratio to assess the company's overall financial health and its ability to manage debt obligations.

Sonic Automotive Inc's debt-to-capital ratio reaching 0.65 as of December 31, 2022, and then slightly decreasing to 0.59 by the end of 2024 shows some fluctuation in the company's capital structure. It would be imperative for stakeholders to continue monitoring this ratio to assess the impact of debt levels on the company's financial stability and performance.