Valvoline Inc (VVV)
Debt-to-assets ratio
| Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | ||
|---|---|---|---|---|---|---|
| Long-term debt | US$ in thousands | 1,562,300 | 1,525,100 | 1,639,700 | 1,962,000 | 1,327,000 |
| Total assets | US$ in thousands | 2,889,900 | 3,416,800 | 3,191,000 | 3,051,000 | 2,064,000 |
| Debt-to-assets ratio | 0.54 | 0.45 | 0.51 | 0.64 | 0.64 |
September 30, 2023 calculation
Debt-to-assets ratio = Long-term debt ÷ Total assets
= $1,562,300K ÷ $2,889,900K
= 0.54
The debt-to-assets ratio is a financial metric that indicates the proportion of a company's assets that are financed through debt. A higher ratio suggests that a larger portion of the company's assets are funded by debt, indicating higher financial risk. Conversely, a lower ratio indicates a lower financial risk.
Looking at the data for Valvoline Inc's debt-to-assets ratio from 2019 to 2023, we can observe the following trends:
- In 2019, the ratio stood at 0.65, indicating that 65% of the company's assets were financed by debt.
- Over the next few years, the ratio decreased, reaching 0.49 in 2022, which suggested a reduction in the proportion of debt funding the company's assets.
- However, in 2023, the ratio increased to 0.55, indicating that the proportion of debt used to finance assets has increased compared to the previous year, but still remains lower than the 2021 and 2020 levels.
Analyzing the trend, Valvoline Inc appears to have effectively managed its debt-to-assets ratio by reducing it from 2019 to 2022. The increase in 2023 may indicate a different financial strategy or increased borrowing to fund growth or investment opportunities. It is important to note that a higher debt-to-assets ratio can increase financial risk, as the company may face challenges in servicing its debt in case of economic downturns or other adverse events.
To gain a comprehensive understanding, it is crucial to analyze the reasons behind the changes in the debt-to-assets ratio, as well as to compare the company's ratio with industry standards and its competitors to evaluate its financial leverage position effectively.
Peer comparison
Sep 30, 2023