Archer-Daniels-Midland Company (ADM)
Financial leverage ratio
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Total assets | US$ in thousands | 54,631,000 | 59,774,000 | 56,136,000 | 49,719,000 | 43,997,000 |
| Total stockholders’ equity | US$ in thousands | 21,432,000 | 22,584,000 | 22,177,000 | 20,000,000 | 13,808,000 |
| Financial leverage ratio | 2.55 | 2.65 | 2.53 | 2.49 | 3.19 |
December 31, 2023 calculation
Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $54,631,000K ÷ $21,432,000K
= 2.55
The financial leverage ratio of Archer-Daniels-Midland Company has exhibited fluctuations over the past five years. The trend indicates a slight decrease from 3.19 in 2019 to 2.55 in 2023, with intermittent variations in between. This ratio suggests that the company relies more on debt financing relative to equity to fund its operations and growth initiatives. The decreasing trend in recent years may imply a potential improvement in the company's financial stability and reduced dependence on debt to support its capital structure. However, despite the fluctuations, the financial leverage ratio remains above 2, indicating a moderate level of financial leverage which could pose risks in times of financial distress or economic downturns. Further analysis of the company's debt management and capital structure strategies would be beneficial to assess the overall effectiveness and sustainability of its leverage position.
Peer comparison
Dec 31, 2023