Valvoline Inc (VVV)
Debt-to-equity 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 stockholders’ equity | US$ in thousands | 203,200 | 306,600 | 134,500 | -76,000 | -257,800 |
| Debt-to-equity ratio | 7.69 | 4.97 | 12.19 | — | — |
September 30, 2023 calculation
Debt-to-equity ratio = Long-term debt ÷ Total stockholders’ equity
= $1,562,300K ÷ $203,200K
= 7.69
The debt-to-equity ratio measures the proportion of a company's financing that comes from debt compared to equity. A higher ratio indicates that the company has been financing its growth through debt, which can increase financial risk.
Looking at the trend for Valvoline Inc, we can see that the debt-to-equity ratio has fluctuated significantly over the past five years.
In 2019 and 2020, the debt-to-equity ratio data is not available, possibly due to a change in reporting or significant shifts in the company's financial structure.
In 2021, the debt-to-equity ratio was at its highest, standing at 12.55, indicating a heavy reliance on debt to finance the company's operations and growth. This could be a cause for concern as it suggests higher financial risk and increased leverage.
In 2022, the ratio decreased to 5.50, reflecting a significant improvement in the company's financial structure. The reduction in the ratio could suggest a decrease in debt, an increase in equity, or a combination of both.
By 2023, the debt-to-equity ratio further increased to 7.81, compared to the previous year, indicating that the company once again relied more on debt to finance its operations.
Overall, the fluctuating trend in the debt-to-equity ratio for Valvoline Inc suggests that the company has experienced volatility in its capital structure and financing decisions over the past few years. It would be important to monitor the trend in the coming years to see if the company continues to manage its debt levels effectively and maintain a healthy balance between debt and equity financing.
Peer comparison
Sep 30, 2023