S&P/ASX 200 Index (ASX: XJO) iron ore favourite Fortescue Metals Group Limited (ASX: FMG) is the smallest of the three major shares involved in mining the steelmaking ingredient.
It offers a market capitalisation of $58 billion. While impressive, such a valuation places it firmly in last place when it comes to the market's three favourite iron ore miners.
Peers BHP Group Ltd (ASX: BHP) and Rio Tinto Limited (ASX: RIO) are worth a respective $224 billion and $159 billion.
But could an investment in Fortescue shares provide a 'healthier' exposure to iron ore? Let's delve into its balance sheet to find out.
How does Fortescue stack up against other iron ore shares?
One measure to assess the 'health' of a company is to look at its debt-to-equity ratios. Doing so can evaluate how much it relies on debt to fund its operations.
But can shares in ASX 200 iron ore favourite Fortescue outperform its major competitors on this front?
As of the end of financial year 2022, Fortescue held US$6.1 billion of total debt and US$5.2 billion of cash. That leaves the company US$879 million in the red and boasting US$17.3 billion of equity.
Thus, the iron ore giant offers 35.19% debt to equity, or a debt-to-equity (D/E) ratio of 0.35.
A D/E ratio is found by dividing a company's total debt by its total equity. Both figures can be found on its balance sheet.
BHP, meanwhile, had gross debt of US$16.4 billion and US$17.2 billion of cash at the end of financial year 2022. It also boasted US$44.9 billion of total equity. That left the largest iron ore goliath with 36.48% debt to equity, or a D/E ratio of 0.36.
However, Rio Tinto might be the most 'healthy' ASX 200 iron ore stock based on these metrics.
It boasted U$50.5 billion of equity as of 30 June 2022. It also held US$11.6 billion of borrowings and US$13.7 billion in cash. That left the stock with a 23% debt to equity or a D/E ratio of around 0.23.
It's also worth pointing out that Fortescue is the only ASX 200 iron ore major with less cash than debt. Though, its net debt position is relatively light compared to many other ASX 200 stocks.
Right now, the Fortescue share price is trading at $19.01, 0.86% lower than its previous close.
For comparison, the ASX 200 is up 0.20% right now while shares in BHP and Rio Tinto have fallen 0.84% and 0.61%, respectively.
