Allete Inc (ALE)

Financial leverage ratio

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Total assets	US$ in thousands	6,656,400	6,845,600	6,422,300	6,084,600	5,482,800
Total stockholders’ equity	US$ in thousands	2,809,600	2,691,900	2,404,300	2,294,600	2,231,900
Financial leverage ratio		2.37	2.54	2.67	2.65	2.46

December 31, 2023 calculation

Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $6,656,400K ÷ $2,809,600K
= 2.37

The financial leverage ratio of Allete, Inc. has shown a fluctuating trend over the past five years. The ratio decreased from 2.67 in 2021 to 2.65 in 2020 before increasing to 2.54 in 2022. However, in 2023, the ratio decreased further to 2.37.

A financial leverage ratio of 2.37 indicates that for every dollar of equity, Allete has $2.37 of debt. The decreasing trend in the ratio suggests that the company may be reducing its reliance on debt to finance its operations or that its equity base is growing faster compared to its debt.

It is important to note that while a lower financial leverage ratio can indicate a lower risk of financial distress due to lower debt levels, it may also imply lower financial leverage to amplify returns for shareholders. Therefore, a company must strike a balance between using debt efficiently to maximize returns and managing the associated risks. Further analysis of the components of the ratio and the company's overall financial strategy would provide more insights into Allete's leverage position.