Adient PLC (ADNT)

Financial leverage ratio

		Sep 30, 2024	Sep 30, 2023	Sep 30, 2022	Sep 30, 2021	Sep 30, 2020
Total assets	US$ in thousands	9,351,000	9,424,000	9,158,000	10,778,000	10,261,000
Total stockholders’ equity	US$ in thousands	2,134,000	2,228,000	2,073,000	2,376,000	1,213,000
Financial leverage ratio		4.38	4.23	4.42	4.54	8.46

September 30, 2024 calculation

Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $9,351,000K ÷ $2,134,000K
= 4.38

The financial leverage ratio for Adient PLC has shown fluctuations over the past five years. The ratio stood at 8.46 in 2020, reflecting a significantly high level of leverage. However, there has been a gradual decrease in the ratio since then, reaching 4.38 in 2024. This indicates a relative decrease in the company's reliance on debt to finance its operations and assets.

It is worth noting that a financial leverage ratio above 1 implies that the company has more debt than equity in its capital structure. Adient PLC's ratios for the past five years have consistently been well above 1, indicating a high level of leverage and financial risk.

Although the ratio decreased from 2020 to 2024, it has remained relatively high throughout the period. Investors and creditors may view this continued high level of leverage as a potential risk, as high debt levels can lead to financial instability, especially in times of economic uncertainty.

Overall, Adient PLC's financial leverage ratio trend suggests a gradual reduction in leverage over the years, but the company still maintains a significantly leveraged capital structure. Management may need to carefully monitor and manage the company's debt levels to maintain financial stability and ensure sustainable growth in the future.