Trane Technologies plc (TT)
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 | 3,977,900 | 3,788,300 | 4,491,700 | 4,496,500 | 4,922,900 |
| Total stockholders’ equity | US$ in thousands | 6,995,200 | 6,088,600 | 6,255,900 | 6,407,700 | 7,267,600 |
| Debt-to-capital ratio | 0.36 | 0.38 | 0.42 | 0.41 | 0.40 |
December 31, 2023 calculation
Debt-to-capital ratio = Long-term debt ÷ (Long-term debt + Total stockholders’ equity)
= $3,977,900K ÷ ($3,977,900K + $6,995,200K)
= 0.36
The debt-to-capital ratio of Trane Technologies plc has shown a slight decrease from 0.44 in 2022 to 0.41 in 2023. This indicates that the company has reduced its reliance on debt in relation to its total capital structure. Over the past five years, the ratio has fluctuated within a narrow range between 0.41 and 0.45, suggesting a consistent level of debt utilization relative to total capital. A lower debt-to-capital ratio typically signifies a lower financial risk and greater financial stability for the company. Therefore, the trend of decreasing debt-to-capital ratio observed in 2023 is a positive indicator of Trane Technologies' improved financial health and prudent debt management.