Allete Inc (ALE)

Financial leverage ratio

Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Total assets US$ in thousands 6,754,300 6,656,400 6,845,600 6,422,300 6,084,600
Total stockholders’ equity US$ in thousands 2,848,000 2,809,600 2,691,900 2,404,300 2,294,600
Financial leverage ratio 2.37 2.37 2.54 2.67 2.65

December 31, 2024 calculation

Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $6,754,300K ÷ $2,848,000K
= 2.37

The financial leverage ratio of Allete Inc has shown a relatively stable trend over the past five years. Starting at 2.65 in December 31, 2020, it increased slightly to 2.67 by the end of 2021. However, there was a decrease in the ratio to 2.54 by December 31, 2022, followed by further decline to 2.37 by the end of 2023, which remained constant in 2024.

A financial leverage ratio above 1 indicates that the company relies more on debt financing than equity. Allete Inc's ratio fluctuated within a moderate range, suggesting a balanced mix of debt and equity in its capital structure. The slight decrease in the ratio from 2022 to 2024 could indicate a reduction in debt relative to equity, which may lead to a lower financial risk for the company. Overall, the trend in Allete Inc's financial leverage ratio indicates a prudent approach to managing its capital structure.