Ashland Global Holdings Inc (ASH)
Financial leverage ratio
| Sep 30, 2024 | Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | ||
|---|---|---|---|---|---|---|
| Total assets | US$ in thousands | 5,645,000 | 5,939,000 | 6,213,000 | 6,612,000 | 6,877,000 |
| Total stockholders’ equity | US$ in thousands | 2,868,000 | 3,097,000 | 3,220,000 | 2,752,000 | 3,036,000 |
| Financial leverage ratio | 1.97 | 1.92 | 1.93 | 2.40 | 2.27 |
September 30, 2024 calculation
Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $5,645,000K ÷ $2,868,000K
= 1.97
The financial leverage ratio of Ashland Global Holdings Inc has shown fluctuations over the past five years. The ratio was 2.27 in Sep 2020, increased to 2.4 in Sep 2021, and then decreased to 1.97 in Sep 2024. This indicates that the company has been using more debt in its capital structure relative to equity in the initial years but has since reduced its reliance on debt financing.
A financial leverage ratio of less than 1 implies that the company is relying more on equity to finance its operations, while a ratio greater than 1 suggests a higher proportion of debt in the capital structure. Ashland's leverage ratios have consistently been above 1, indicating a reliance on debt financing. However, the decreasing trend from 2.40 in 2021 to 1.97 in 2024 suggests a shift towards a more balanced mix of debt and equity.
It is important to note that a lower financial leverage ratio signifies lower financial risk and greater stability, as higher leverage ratios imply higher financial risk due to increased interest payments and potential solvency issues. Therefore, the recent decrease in Ashland's financial leverage ratio may indicate a positive trend towards a more sustainable and stable financial position.
Peer comparison
Sep 30, 2024