The AES Corporation (AES)
Financial leverage ratio
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Total assets | US$ in thousands | 47,406,000 | 44,799,000 | 38,363,000 | 32,963,000 | 34,603,000 |
| Total stockholders’ equity | US$ in thousands | 3,644,000 | 2,488,000 | 2,437,000 | 2,798,000 | 2,634,000 |
| Financial leverage ratio | 13.01 | 18.01 | 15.74 | 11.78 | 13.14 |
December 31, 2024 calculation
Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $47,406,000K ÷ $3,644,000K
= 13.01
The financial leverage ratio of The AES Corporation has shown fluctuations over the five-year period from 2020 to 2024. Starting at 13.14 in 2020, the ratio decreased in 2021 to 11.78, indicating a reduction in the firm's reliance on debt financing compared to its equity. However, in the following years, the ratio increased significantly, reaching 18.01 by the end of 2023, suggesting a higher level of financial leverage. This upward trend continued to 2024, although at a slightly lower level of 13.01.
Overall, the increasing trend in the financial leverage ratio from 2021 to 2023 may indicate that The AES Corporation has been taking on more debt relative to its equity, potentially increasing financial risk. It would be crucial for stakeholders to closely monitor the company's leverage levels to assess its ability to meet obligations and manage potential risks associated with higher debt levels.