Aecom Technology Corporation (ACM)
Financial leverage ratio
| Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | ||
|---|---|---|---|---|---|---|
| Total assets | US$ in thousands | 11,233,400 | 11,139,300 | 11,734,000 | 12,999,000 | 14,550,900 |
| Total stockholders’ equity | US$ in thousands | 2,212,330 | 2,476,650 | 2,712,470 | 3,292,560 | 3,690,580 |
| Financial leverage ratio | 5.08 | 4.50 | 4.33 | 3.95 | 3.94 |
September 30, 2023 calculation
Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $11,233,400K ÷ $2,212,330K
= 5.08
The financial leverage ratio for AECOM has shown an increasing trend over the past five years, with the ratio increasing from 3.92 in 2019 to 5.08 in 2023. This indicates that the company's reliance on debt to finance its assets and operations has been rising steadily.
A higher financial leverage ratio suggests that the company is using more debt to finance its growth and operations, which can lead to increased financial risk. It also implies that a greater portion of the company's assets are funded by creditors rather than shareholders.
While higher leverage can magnify returns on equity when the company is performing well, it can also increase the risk of financial distress during economic downturns. Therefore, careful monitoring of the company's ability to service its debt obligations is essential, especially as the financial leverage ratio continues to rise.
Peer comparison
Sep 30, 2023