Capital intensity: Companies in industries that require large physical assets (e.g. telecommunications, utilities) often carry high debt, which they can manage if they generate stable profits. As of 12/31/24, AT&T Inc. (T) had current liabilities of $46,872 million, long-term debt of $118,443 million and stockholders’ equity of $118,245 million (debt-to-equity ratio of 1.4).
Cyclicality: Companies in cyclical industries (e.g. oil & gas, retail) are typically funded mainly by equity to avoid liquidity problems during lean phases. As of 12/31/24, Exxon Mobil Corporation (XOM) had current liabilities of $70,307 million, long-term debt of $36,755 million and stockholders’ equity of $270,606 million (debt-to-equity ratio of 0.4).