Smith AO Corporation (AOS)
Financial leverage ratio
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Total assets | US$ in thousands | 3,213,900 | 3,332,300 | 3,474,400 | 3,160,700 | 3,058,000 |
| Total stockholders’ equity | US$ in thousands | 1,844,400 | 1,747,700 | 1,832,200 | 1,848,300 | 1,666,800 |
| Financial leverage ratio | 1.74 | 1.91 | 1.90 | 1.71 | 1.83 |
December 31, 2023 calculation
Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $3,213,900K ÷ $1,844,400K
= 1.74
The financial leverage ratio of A.O. Smith Corp. has exhibited fluctuations over the past five years, ranging from 1.71 to 1.91. The ratio measures the extent to which the company relies on debt to finance its operations and growth. A higher ratio indicates higher financial leverage, implying a greater proportion of debt in the capital structure.
In 2023, the financial leverage ratio decreased to 1.74 from 1.91 in 2022, indicating a lower reliance on debt to support the company's assets. This could suggest a potential deleveraging strategy or a shift towards equity financing.
Comparing the ratios over the past five years, there seems to be some variability in the company's leverage position. It is important to consider the industry norms and the company's specific circumstances when analyzing the financial leverage ratio to determine the implications for A.O. Smith Corp.'s financial health and risk profile.
Peer comparison
Dec 31, 2023