Watsco Inc (WSO)
Debt-to-equity ratio
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Long-term debt | US$ in thousands | 15,400 | 105,600 | 342,900 | 197,600 | 0 | 8,800 | 203,600 | 262,500 | 89,000 | 1,724 | 114,167 | 48,900 | 0 | 668 | 33,357 | 156,143 | 157,709 | 171,163 | 221,312 | 139,249 |
| Total stockholders’ equity | US$ in thousands | 2,229,840 | 2,224,010 | 2,037,650 | 1,928,870 | 1,889,240 | 1,908,780 | 1,834,440 | 1,725,210 | 1,664,950 | 1,644,580 | 1,575,700 | 1,491,410 | 1,486,680 | 1,489,610 | 1,437,040 | 1,404,340 | 1,435,430 | 1,443,110 | 1,355,600 | 1,335,210 |
| Debt-to-equity ratio | 0.01 | 0.05 | 0.17 | 0.10 | 0.00 | 0.00 | 0.11 | 0.15 | 0.05 | 0.00 | 0.07 | 0.03 | 0.00 | 0.00 | 0.02 | 0.11 | 0.11 | 0.12 | 0.16 | 0.10 |
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 shown fluctuation over the past eight quarters. The ratio has ranged from a low of 0.06 in Q4 2022 to a high of 0.22 in Q2 2023. Overall, the company's debt relative to its equity has been relatively low, indicating a conservative capital structure strategy.
The increase in the debt-to-equity ratio from 0.06 in Q4 2022 to 0.22 in Q2 2023 suggests that the company took on more debt compared to its equity during this period. This could be due to various reasons, such as funding strategic acquisitions, investing in growth opportunities, or managing working capital needs. However, the subsequent decrease in Q3 2023 to 0.10 indicates a reduction in the debt levels or an increase in equity, potentially signaling a shift towards a more balanced leverage position.
It is important to note that a lower debt-to-equity ratio generally indicates lower financial risk and greater financial stability for the company. A higher ratio may suggest increased financial risk, as the company is relying more heavily on debt to finance its operations. Therefore, monitoring the trend of the debt-to-equity ratio over time is crucial for assessing Watsco Inc.'s financial health and risk profile.