Wolfspeed Inc (WOLF)

Debt-to-capital ratio

		Jun 30, 2024	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021	Jun 30, 2020
Long-term debt	US$ in thousands	6,161,100	4,175,100	1,021,600	823,900	783,800
Total stockholders’ equity	US$ in thousands	882,100	1,621,900	2,439,300	2,116,500	2,083,100
Debt-to-capital ratio		0.87	0.72	0.30	0.28	0.27

June 30, 2024 calculation

Debt-to-capital ratio = Long-term debt ÷ (Long-term debt + Total stockholders’ equity)
= $6,161,100K ÷ ($6,161,100K + $882,100K)
= 0.87

From 2020 to 2024, Wolfspeed Inc's debt-to-capital ratio has shown varying trends. The ratio has been on an upward trajectory, increasing from 0.27 in 2020 to 0.87 in 2024. This signifies a significant rise in the proportion of debt to the total capital employed by the company.

The substantial increase in the debt-to-capital ratio indicates that Wolfspeed Inc has been relying more on debt to finance its operations and growth initiatives over the years. This could be due to various reasons such as expanding business operations, funding large-scale projects, or acquisitions.

A higher debt-to-capital ratio can increase financial risk for the company, as it indicates a heavier reliance on borrowed funds. It may also lead to higher interest payments, affecting profitability and cash flow. Investors and creditors may view a high debt-to-capital ratio as a red flag, signaling potential financial distress or inability to meet debt obligations.

It is essential for Wolfspeed Inc to carefully manage its debt levels and ensure that it is sustainable in the long term. Monitoring and potentially reducing the debt-to-capital ratio could help the company improve its financial health and maintain investor confidence.