Armstrong World Industries Inc (AWI)

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	1,672,400	1,713,800	1,712,300	1,687,900	1,687,200	1,739,400	1,734,000	1,708,100	1,710,000	1,704,900	1,716,700	1,715,300	1,718,500	1,633,700	1,544,300	1,590,300	1,493,300	1,509,700	1,890,000	1,942,600
Total stockholders’ equity	US$ in thousands	591,800	585,500	566,700	544,800	535,000	521,200	527,800	537,600	519,700	522,200	498,300	473,600	450,900	442,600	402,900	370,400	364,900	367,300	243,100	245,100
Financial leverage ratio		2.83	2.93	3.02	3.10	3.15	3.34	3.29	3.18	3.29	3.26	3.45	3.62	3.81	3.69	3.83	4.29	4.09	4.11	7.77	7.93

December 31, 2023 calculation

Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $1,672,400K ÷ $591,800K
= 2.83

Armstrong World Industries Inc.'s financial leverage ratio has exhibited a declining trend from Q4 2022 to Q1 2023, indicating an improvement in the company's leverage position. The ratio decreased from 3.15 in Q4 2022 to 3.10 in Q1 2023. However, it is important to note that the financial leverage ratio has been fluctuating within a narrow range between 2.83 and 3.34 over the past eight quarters.

A financial leverage ratio of 3.10 in Q1 2023 suggests that the company finances its assets with approximately 3.10 units of debt for every unit of equity. This indicates a moderate level of leverage, which may pose some risk but also offers the potential for higher returns to equity investors. The decreasing trend in the financial leverage ratio indicates that Armstrong World Industries Inc. has been reducing its reliance on debt to fund its operations, which could lead to a more stable financial position in the long term.

Overall, the evolving financial leverage ratio of Armstrong World Industries Inc. reflects a strategic approach towards managing its debt levels and optimizing its capital structure to support sustainable growth and profitability. However, it is essential for the company to continue monitoring and adjusting its leverage position to strike a balance between risk and return in the constantly changing business environment.