The AES Corporation (AES)
Financial leverage ratio
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Total assets | US$ in thousands | 44,799,000 | 38,363,000 | 32,963,000 | 34,603,000 | 33,648,000 |
| Total stockholders’ equity | US$ in thousands | 2,488,000 | 2,437,000 | 2,798,000 | 2,634,000 | 2,996,000 |
| Financial leverage ratio | 18.01 | 15.74 | 11.78 | 13.14 | 11.23 |
December 31, 2023 calculation
Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $44,799,000K ÷ $2,488,000K
= 18.01
The financial leverage ratio of AES Corp. has been fluctuating over the past five years. There was a notable increase in the financial leverage ratio from 11.23 in 2019 to 13.14 in 2020, indicating an increase in the company's reliance on debt to finance its operations in that particular year. Subsequently, the ratio decreased to 11.78 in 2021 before witnessing a significant rise to 15.74 in 2022 and further to 18.01 in 2023.
The upward trend in the financial leverage ratio from 2020 to 2023 suggests that AES Corp. has been increasingly using debt to support its business activities and investments. A higher leverage ratio generally indicates higher financial risk for the company as it implies a greater proportion of debt in its capital structure.
It would be important for AES Corp. to carefully manage its debt levels to ensure that it can comfortably meet its debt obligations and maintain financial stability. Monitoring the trend in the financial leverage ratio over time will be crucial for assessing the company's overall financial health and risk profile.