Ashland Global Holdings Inc (ASH)
Financial leverage ratio
| Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | ||
|---|---|---|---|---|---|---|
| Total assets | US$ in thousands | 5,939,000 | 6,213,000 | 6,612,000 | 6,877,000 | 7,251,000 |
| Total stockholders’ equity | US$ in thousands | 3,097,000 | 3,220,000 | 2,752,000 | 3,036,000 | 3,571,000 |
| Financial leverage ratio | 1.92 | 1.93 | 2.40 | 2.27 | 2.03 |
September 30, 2023 calculation
Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $5,939,000K ÷ $3,097,000K
= 1.92
The financial leverage ratio measures the extent to which a company utilizes debt to finance its assets. Ashland Inc's financial leverage ratio has fluctuated over the past five years, decreasing from 2.40 in 2021 to 1.92 in 2023. This suggests a reduction in the company's reliance on debt to fund its operations and investments.
A lower financial leverage ratio indicates that Ashland Inc is using less debt relative to its equity, which can be seen as a positive sign by investors and creditors. It implies that the company has a stronger financial position and lower risk of insolvency, as it is less leveraged and less susceptible to fluctuations in interest rates.
However, it is important to consider the reasons behind this trend. While a lower financial leverage ratio may indicate prudent financial management, it could also reflect a decrease in the company's borrowing capacity or investment in less risky but lower-return projects.
Overall, the decreasing trend in Ashland Inc's financial leverage ratio suggests a more conservative approach to financing its operations and investments, potentially strengthening its financial position and mitigating risk.
Peer comparison
Sep 30, 2023