SM Energy Co (SM)

Debt-to-capital ratio

Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020 Dec 31, 2019 Sep 30, 2019 Jun 30, 2019 Mar 31, 2019
Long-term debt US$ in thousands 1,575,330 1,574,550 1,573,770 1,572,990 3,144,420 3,142,860 3,141,300 3,960,780 3,754,620 4,155,260 4,331,750 4,386,300 2,214,320 2,175,040 193,000 2,645,380 2,610,300 2,735,770 2,721,240 2,646,290
Total stockholders’ equity US$ in thousands 3,615,850 3,404,290 3,298,470 3,229,800 3,085,460 2,867,660 2,444,900 2,115,110 2,063,130 1,636,900 1,552,510 1,769,670 2,016,160 2,185,110 2,280,830 2,341,720 2,748,990 2,843,750 2,801,840 2,743,220
Debt-to-capital ratio 0.30 0.32 0.32 0.33 0.50 0.52 0.56 0.65 0.65 0.72 0.74 0.71 0.52 0.50 0.08 0.53 0.49 0.49 0.49 0.49

December 31, 2023 calculation

Debt-to-capital ratio = Long-term debt ÷ (Long-term debt + Total stockholders’ equity)
= $1,575,330K ÷ ($1,575,330K + $3,615,850K)
= 0.30

The debt-to-capital ratio of SM Energy Co has shown a decreasing trend over the past two years, indicating improvements in the company's financial leverage. The ratio has decreased from 0.48 in Q1 2022 to 0.30 in Q4 2023. This signifies that the company is relying less on debt to finance its operations and investments, and is instead relying more on equity.

A lower debt-to-capital ratio is generally viewed positively by investors and creditors as it suggests lower financial risk and greater financial stability. The decreasing trend in the ratio reflects the company's efforts to strengthen its balance sheet and improve its overall financial health.

The consistent reduction in the debt-to-capital ratio may also indicate that SM Energy Co is effectively managing its debt levels and strategically using capital to support its business operations and growth initiatives. Despite the fluctuations in the ratio over the quarters, the overall downward trend suggests a positive financial position for the company in terms of its leverage and capital structure.