SolarEdge Technologies Inc (SEDG)

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	627,381	624,451	1,243,070	1,146,700	173
Total stockholders’ equity	US$ in thousands	2,411,910	2,176,370	1,310,040	1,085,760	811,670
Debt-to-capital ratio		0.21	0.22	0.49	0.51	0.00

December 31, 2023 calculation

Debt-to-capital ratio = Long-term debt ÷ (Long-term debt + Total stockholders’ equity)
= $627,381K ÷ ($627,381K + $2,411,910K)
= 0.21

The debt-to-capital ratio of Solaredge Technologies Inc has shown a decreasing trend over the past five years, declining from 0.02 in 2019 to 0.22 in 2023. This indicates that the company has been relying less on debt to finance its operations and growth, and has been increasingly funding its activities through equity and internal resources. The reduction in the debt-to-capital ratio may suggest improved financial stability and lower financial risk for the company, as lower debt levels typically lead to lower interest expenses and less leverage. However, it is essential to consider the reasons behind this trend and evaluate whether the company's capital structure is optimal for its long-term growth and shareholder value creation. Additionally, while a lower debt-to-capital ratio could imply greater financial health, excessively low levels of debt may also signal underutilization of cheaper debt financing that could enhance returns for shareholders.