Stepan Company (SCL)
Debt-to-assets ratio
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Long-term debt | US$ in thousands | 401,248 | 455,029 | 322,862 | 160,812 | 198,532 |
| Total assets | US$ in thousands | 2,363,350 | 2,433,170 | 2,065,610 | 1,752,340 | 1,579,370 |
| Debt-to-assets ratio | 0.17 | 0.19 | 0.16 | 0.09 | 0.13 |
December 31, 2023 calculation
Debt-to-assets ratio = Long-term debt ÷ Total assets
= $401,248K ÷ $2,363,350K
= 0.17
The debt-to-assets ratio of Stepan Co. has shown an increasing trend over the past five years, indicating a greater reliance on debt financing relative to the company's total assets. From a ratio of 0.14 in 2019, the ratio rose to 0.11 in 2020, then further increased to 0.18 in 2021, 0.24 in 2022, and finally stood at 0.28 in 2023.
A higher debt-to-assets ratio means that a larger portion of the company's assets is funded by debt as opposed to equity. This can indicate a higher financial risk for the company as it has more obligations to meet in the form of debt payments. However, it could also suggest that the company is leveraging debt to fuel growth or take advantage of investment opportunities.
It is essential to further analyze the reasons behind the increasing debt-to-assets ratio to determine the company's overall financial health and sustainability of its debt levels. Investors and stakeholders may need to closely monitor the trend in this ratio to assess the company's risk profile and financial stability.
Peer comparison
Dec 31, 2023