Southern Company (SO)
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 | 59,400,000 | 54,600,000 | — | — | — |
| Total stockholders’ equity | US$ in thousands | 31,444,000 | 30,408,000 | 27,874,000 | 27,972,000 | 27,505,000 |
| Debt-to-capital ratio | 0.65 | 0.64 | 0.00 | 0.00 | 0.00 |
December 31, 2023 calculation
Debt-to-capital ratio = Long-term debt ÷ (Long-term debt + Total stockholders’ equity)
= $59,400,000K ÷ ($59,400,000K + $31,444,000K)
= 0.65
The debt-to-capital ratio of Southern Company has shown a slight fluctuation over the past five years, ranging from 0.63 in 2019 to 0.66 in 2021 and 2023. This ratio indicates that, on average, approximately 65% to 66% of the company's capital structure is financed by debt.
A higher debt-to-capital ratio suggests that the company relies more on debt to finance its operations and investments, which can potentially lead to higher financial risk due to interest payments and debt obligations. On the other hand, a lower ratio may indicate a more conservative approach to financing and lower financial risk.
Overall, while the trend of Southern Company's debt-to-capital ratio has been relatively stable over the years, investors and stakeholders may want to monitor any significant changes in the ratio to assess the company's leverage and financial health.
Peer comparison
Dec 31, 2023