Alcoa Corp (AA)
Financial leverage ratio
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Total assets | US$ in thousands | 14,065,000 | 14,155,000 | 14,756,000 | 15,025,000 | 14,860,000 |
| Total stockholders’ equity | US$ in thousands | 5,159,000 | 4,251,000 | 5,076,000 | 4,672,000 | 3,311,000 |
| Financial leverage ratio | 2.73 | 3.33 | 2.91 | 3.22 | 4.49 |
December 31, 2024 calculation
Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $14,065,000K ÷ $5,159,000K
= 2.73
The financial leverage ratio of Alcoa Corp has shown a declining trend over the past few years, indicating an improvement in the company's financial health. As of December 31, 2020, the ratio stood at 4.49, signaling that Alcoa relied heavily on debt to finance its operations. However, by December 31, 2024, the financial leverage ratio had decreased to 2.73, suggesting that the company has reduced its reliance on debt as a source of funding.
This declining trend in the financial leverage ratio is generally positive as it signifies that Alcoa has been able to reduce its debt levels relative to its equity, which can lead to a lower risk of financial distress and increased financial flexibility. It may also indicate that the company has improved its profitability and operational efficiency, allowing it to generate higher earnings relative to its debt obligations.
Overall, the trend in Alcoa Corp's financial leverage ratio reflects a strengthening financial position and a more conservative capital structure, which can be viewed as a positive development for the company and its stakeholders.
Peer comparison
Dec 31, 2024