Advanced Drainage Systems Inc (WMS)
Debt-to-assets ratio
| Mar 31, 2024 | Mar 31, 2023 | Mar 31, 2022 | Mar 31, 2021 | Mar 31, 2020 | ||
|---|---|---|---|---|---|---|
| Long-term debt | US$ in thousands | 1,259,520 | 1,269,390 | 908,705 | 782,220 | 1,089,370 |
| Total assets | US$ in thousands | 3,268,910 | 2,901,120 | 2,649,760 | 2,413,830 | 2,369,890 |
| Debt-to-assets ratio | 0.39 | 0.44 | 0.34 | 0.32 | 0.46 |
March 31, 2024 calculation
Debt-to-assets ratio = Long-term debt ÷ Total assets
= $1,259,520K ÷ $3,268,910K
= 0.39
The debt-to-assets ratio of Advanced Drainage Systems Inc has fluctuated over the past five years, ranging from 0.32 to 0.46. In general, a decreasing trend in the debt-to-assets ratio indicates a lower proportion of debt relative to assets, which can be considered favorable as it suggests a stronger financial position with less reliance on debt financing.
However, the ratio increased from 0.34 in 2022 to 0.46 in 2020, indicating a significant rise in debt relative to assets during that period. While a higher ratio implies higher financial leverage and potential risk, it can also indicate increased investment in assets to support business growth.
It is noteworthy that the ratio decreased to 0.39 in 2024, which may suggest a conscious effort to reduce debt levels or a more efficient utilization of assets to generate revenue. This improvement could be viewed positively by stakeholders as it indicates a more conservative approach towards debt management and potentially enhanced financial stability.
Overall, a debt-to-assets ratio of around 0.39 as of March 31, 2024, suggests that approximately 39% of the company's assets are financed through debt. This level of leverage can be considered moderate and indicates a balanced approach to capital structure, reflecting a mix of debt and equity financing to support the operations and growth of Advanced Drainage Systems Inc.