Black Hills Corporation (BKH)
Financial leverage ratio
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Total assets | US$ in thousands | 9,620,400 | 9,618,200 | 9,131,900 | 8,088,790 | 7,558,460 |
| Total stockholders’ equity | US$ in thousands | 3,215,300 | 2,994,900 | 2,787,090 | 2,561,380 | 2,362,120 |
| Financial leverage ratio | 2.99 | 3.21 | 3.28 | 3.16 | 3.20 |
December 31, 2023 calculation
Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $9,620,400K ÷ $3,215,300K
= 2.99
The financial leverage ratio of Black Hills Corporation has been fluctuating over the past five years, ranging from 2.99 to 3.28. This ratio indicates how much of the company's assets are financed through debt as opposed to equity. A higher ratio suggests a higher level of debt relative to equity, which can indicate increased financial risk due to the company's dependence on borrowed funds.
In general, a financial leverage ratio above 3 signifies that Black Hills Corporation relies more heavily on debt to finance its operations and investments compared to equity. This can potentially lead to challenges in meeting debt obligations, especially in times of economic uncertainty or increasing interest rates.
The slight decrease in the financial leverage ratio from 3.28 in 2021 to 2.99 in 2023 may indicate that the company has reduced its reliance on debt financing or improved its financial position. However, it is essential to closely monitor this ratio over time to assess the company's overall financial health and risk profile.
Peer comparison
Dec 31, 2023