Avery Dennison Corp (AVY)
Financial leverage ratio
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Total assets | US$ in thousands | 8,209,800 | 8,133,100 | 8,266,300 | 8,222,300 | 7,950,500 | 8,042,300 | 8,092,400 | 8,138,800 | 7,971,600 | 7,967,700 | 6,422,500 | 6,273,200 | 6,083,900 | 5,720,800 | 5,651,700 | 6,260,900 | 5,488,800 | 5,338,700 | 5,389,700 | 5,353,700 |
| Total stockholders’ equity | US$ in thousands | 2,127,900 | 2,063,600 | 2,015,200 | 2,042,900 | 2,032,200 | 2,007,300 | 1,936,900 | 1,932,500 | 1,924,400 | 1,799,200 | 1,703,600 | 1,581,900 | 1,484,900 | 1,334,600 | 1,213,900 | 1,173,400 | 1,204,000 | 1,057,400 | 1,062,500 | 991,900 |
| Financial leverage ratio | 3.86 | 3.94 | 4.10 | 4.02 | 3.91 | 4.01 | 4.18 | 4.21 | 4.14 | 4.43 | 3.77 | 3.97 | 4.10 | 4.29 | 4.66 | 5.34 | 4.56 | 5.05 | 5.07 | 5.40 |
December 31, 2023 calculation
Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $8,209,800K ÷ $2,127,900K
= 3.86
Avery Dennison Corp's financial leverage ratio has been fluctuating over the past few quarters, ranging from 3.77 to 5.40. The financial leverage ratio measures the company's level of debt financing relative to its equity. A higher ratio indicates a higher level of financial leverage, implying that the company is relying more on debt to finance its operations and investments.
The company's financial leverage ratio has generally been trending upwards from 3.77 in Jun 2021 to a peak of 5.40 in Mar 2019, before slightly declining in recent quarters. This upward trend suggests that Avery Dennison Corp has been increasing its reliance on debt financing compared to equity. While a higher financial leverage ratio can amplify returns on equity in profitable times, it also increases the risk of financial distress during economic downturns or if the company's operating performance weakens.
It is important for investors and stakeholders to closely monitor Avery Dennison Corp's financial leverage ratio over time to assess the company's overall financial health and risk exposure associated with its capital structure. Additionally, management should ensure that the capital structure remains sustainable and aligned with the company's long-term strategic objectives.
Peer comparison
Dec 31, 2023