Sonic Automotive Inc (SAH)

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	1,616,500	1,672,200	1,510,700	651,800	636,978
Total stockholders’ equity	US$ in thousands	891,900	895,200	1,076,400	814,800	944,800
Debt-to-equity ratio		1.81	1.87	1.40	0.80	0.67

December 31, 2023 calculation

Debt-to-equity ratio = Long-term debt ÷ Total stockholders’ equity
= $1,616,500K ÷ $891,900K
= 1.81

The debt-to-equity ratio for Sonic Automotive, Inc. has been steadily increasing over the past five years, reflecting a higher reliance on debt to finance its operations relative to equity. The ratio has increased from 2.42 in 2019 to 4.05 in 2023, indicating a significant rise in the proportion of debt to equity in the company's capital structure.

This trend suggests that Sonic Automotive may be taking on more debt to fund its growth, acquisitions, or other investment activities. A higher debt-to-equity ratio can indicate increased financial risk, as it implies a larger portion of the company's financing comes from creditors rather than shareholders.

It is important for stakeholders to closely monitor this trend and assess the company's ability to manage its debt levels effectively to ensure long-term financial stability and sustainability. Additionally, potential risks associated with a high debt-to-equity ratio include increased interest expenses, potential liquidity issues, and heightened vulnerability to economic downturns or financial shocks.