Watsco Inc (WSO)
Debt-to-equity ratio
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Long-term debt | US$ in thousands | 15,400 | 0 | 89,000 | 0 | 157,709 |
| Total stockholders’ equity | US$ in thousands | 2,229,840 | 1,889,240 | 1,664,950 | 1,486,680 | 1,435,430 |
| Debt-to-equity ratio | 0.01 | 0.00 | 0.05 | 0.00 | 0.11 |
December 31, 2023 calculation
Debt-to-equity ratio = Long-term debt ÷ Total stockholders’ equity
= $15,400K ÷ $2,229,840K
= 0.01
The debt-to-equity ratio of Watsco Inc. has fluctuated over the past five years, indicating changes in the company's capital structure and financial leverage.
In 2023, the debt-to-equity ratio stands at 0.06, which is the lowest in the period under review. This implies that Watsco has a lower level of debt relative to its equity, indicating a conservative approach to debt financing. The decrease in the ratio from the previous year suggests a reduction in the company's reliance on debt to fund its operations.
Comparing to 2022, when the ratio was at 0.08, the decrease in 2023 indicates a strengthening of the company's financial position in terms of debt management.
In 2021, the debt-to-equity ratio was 0.11, representing a higher level of debt compared to equity. This may suggest increased risk due to higher financial leverage, although the ratio has decreased in 2023.
The sharp decrease in the ratio from 0.16 in 2019 to 0.05 in 2020 reflects a significant improvement in the company's capital structure and a reduction in financial risk.
Overall, Watsco Inc. has shown variability in its debt-to-equity ratio over the past five years. The current low ratio may indicate a prudent financial strategy aimed at minimizing debt levels and maintaining a healthy balance between debt and equity in the company's capital structure.