UGI Corporation (UGI)
Debt-to-capital ratio
| Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | ||
|---|---|---|---|---|---|---|
| Long-term debt | US$ in thousands | 6,543,000 | 6,483,000 | 6,339,000 | 5,981,000 | 5,780,000 |
| Total stockholders’ equity | US$ in thousands | 4,386,000 | 6,066,000 | 5,522,000 | 4,128,000 | 3,817,000 |
| Debt-to-capital ratio | 0.60 | 0.52 | 0.53 | 0.59 | 0.60 |
September 30, 2023 calculation
Debt-to-capital ratio = Long-term debt ÷ (Long-term debt + Total stockholders’ equity)
= $6,543,000K ÷ ($6,543,000K + $4,386,000K)
= 0.60
The debt-to-capital ratio is a measure of a company's financial leverage, indicating the proportion of a company's capital structure that is financed by debt. A higher ratio suggests higher financial risk, as the company relies more heavily on borrowed funds.
Looking at the debt-to-capital ratio of UGI Corp. over the past five years, we can see some fluctuation in the ratio. In 2019, the ratio was 0.63, indicating that approximately 63% of the company's capital structure was financed by debt. Over the next two years, the ratio decreased to 0.55 in 2021 before increasing slightly to 0.54 in 2022.
In the most recent year, the debt-to-capital ratio rose to 0.62. This suggests that UGI Corp. increased its reliance on debt financing compared to the previous year. However, it is important to note that the ratio is still within a reasonable range and not at an alarming level.
The increase in the debt-to-capital ratio could be attributed to various reasons, such as a strategic decision to take on more debt to fund expansion or acquisitions, or it could be a result of a decrease in equity capital due to share repurchases or other factors.
It's essential to consider the reasons behind the changes in the debt-to-capital ratio and evaluate UGI Corp.'s overall financial position in conjunction with other financial metrics to get a complete understanding of the company's financial health. Additionally, monitoring how the company manages its debt levels and uses the borrowed funds to generate returns for shareholders will be critical in assessing the impact of the debt-to-capital ratio on the company's performance and future prospects.
Peer comparison
Sep 30, 2023