Sonoco Products Company (SON)
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 | 3,035,870 | 2,719,780 | 1,199,110 | 1,244,440 | 1,193,140 |
| Total assets | US$ in thousands | 7,191,960 | 7,052,940 | 5,073,240 | 5,277,260 | 5,126,290 |
| Debt-to-assets ratio | 0.42 | 0.39 | 0.24 | 0.24 | 0.23 |
December 31, 2023 calculation
Debt-to-assets ratio = Long-term debt ÷ Total assets
= $3,035,870K ÷ $7,191,960K
= 0.42
The debt-to-assets ratio is a key financial metric used to assess a company's leverage and financial risk. For Sonoco Products Co., the debt-to-assets ratio has fluctuated over the past five years. In 2023, the ratio stands at 0.43, indicating that 43% of the company's assets are financed by debt. This represents a slight decrease from the previous year's ratio of 0.46, suggesting a reduction in the level of debt relative to assets.
Comparing the current ratio to earlier years, we observe that in 2021, Sonoco had a lower debt-to-assets ratio of 0.32, implying a more conservative capital structure with a smaller proportion of debt funding its assets. The ratios for both 2020 and 2019 were also 0.32 and 0.33, respectively, showing stability in the company's debt utilization over those years.
Overall, the trend in Sonoco's debt-to-assets ratio indicates some variability in the extent to which the company employs debt to finance its operations and investments. A lower ratio suggests a lower financial risk, as the company relies less on debt financing, while a higher ratio may indicate a higher level of leverage and financial risk. The analysis highlights the importance of monitoring changes in the debt-to-assets ratio to assess the company's financial health and risk profile over time.
Peer comparison
Dec 31, 2023