Archrock Inc (AROC)
Financial leverage ratio
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Total assets | US$ in thousands | 2,655,950 | 2,598,750 | 2,589,970 | 2,779,720 | 3,109,980 |
| Total stockholders’ equity | US$ in thousands | 871,021 | 860,693 | 891,438 | 935,557 | 1,085,960 |
| Financial leverage ratio | 3.05 | 3.02 | 2.91 | 2.97 | 2.86 |
December 31, 2023 calculation
Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $2,655,950K ÷ $871,021K
= 3.05
Archrock Inc's financial leverage ratio has been fluctuating over the past five years, ranging from 2.86 in 2019 to 3.05 in 2023. The financial leverage ratio indicates the extent to which the company relies on debt financing to support its operations. A higher financial leverage ratio suggests that the company has a higher proportion of debt in its capital structure compared to equity.
In this case, the increasing trend in the financial leverage ratio from 2019 to 2023 indicates that Archrock Inc has been increasing its reliance on debt financing over the years. This may have been done to fund growth opportunities, acquisitions, or capital expenditures. However, a high financial leverage ratio also indicates a higher level of financial risk, as the company is more vulnerable to economic downturns or fluctuations in interest rates.
It is important for investors and stakeholders to monitor Archrock Inc's financial leverage ratio closely to ensure that the company maintains a balanced capital structure and manageable levels of debt. An excessively high financial leverage ratio may lead to financial difficulties in the future if the company struggles to meet its debt obligations or faces challenges in refinancing its debt.
Peer comparison
Dec 31, 2023