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GuruFocus has detected 4 Warning Signs with CarMax Inc \$KMX.
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CarMax Inc (NYSE:KMX)
Debt-to-Equity
3.92 (As of Nov. 2016)

CarMax Inc's current portion of long-term debt for the quarter that ended in Nov. 2016 was \$324 Mil. CarMax Inc's long-term debt for the quarter that ended in Nov. 2016 was \$11,485 Mil. CarMax Inc's total equity for the quarter that ended in Nov. 2016 was \$3,015 Mil. CarMax Inc's debt to equity for the quarter that ended in Nov. 2016 was 3.92.

A high debt to equity ratio generally means that a company has been aggressive in financing its growth with debt. This can result in volatile earnings as a result of the additional interest expense.

Definition

Debt to Equity measures the financial leverage a company has.

CarMax Inc's Debt to Equity Ratio for the fiscal year that ended in Feb. 2016 is calculated as

 Debt to Equity = Total Debt / Total Equity = (Current Portion of Long-Term Debt + Long-Term Debt) / Total Equity = (315.509 + 10342.323) / 2904.786 = 3.67

CarMax Inc's Debt to Equity Ratio for the quarter that ended in Nov. 2016 is calculated as

 Debt to Equity = Total Debt / Total Equity = (Current Portion of Long-Term Debt + Long-Term Debt) / Total Equity = (324.304 + 11484.527) / 3015.384 = 3.92

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Explanation

In the calculation of Debt to Equity, we use the total of Current Portion of Long-Term Debt and Long-Term Debt divided by Total Equity. In some calculations, Total Liabilities is used to for calculation.

Be Aware

Because a company can increase its Return on Equity by having more financial leverage, it is important to watch the leverage ratio when investing in high Return on Equity companies.

Related Terms

Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

CarMax Inc Annual Data

 Feb07 Feb08 Feb09 Feb10 Feb11 Feb12 Feb13 Feb14 Feb15 Feb16 deb2equity 0.15 0.22 0.21 0.08 1.77 1.89 2.06 2.29 2.89 3.67

CarMax Inc Quarterly Data

 Aug14 Nov14 Feb15 May15 Aug15 Nov15 Feb16 May16 Aug16 Nov16 deb2equity 2.45 2.77 2.89 2.90 3.06 3.64 3.67 3.65 3.75 3.92
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