Topbuild Corp (BLD)
Financial leverage ratio
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Total assets | US$ in thousands | 5,162,850 | 4,606,830 | 4,258,530 | 2,815,280 | 2,603,960 |
| Total stockholders’ equity | US$ in thousands | 2,563,660 | 1,929,710 | 1,636,430 | 1,348,790 | 1,152,890 |
| Financial leverage ratio | 2.01 | 2.39 | 2.60 | 2.09 | 2.26 |
December 31, 2023 calculation
Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $5,162,850K ÷ $2,563,660K
= 2.01
The financial leverage ratio of TopBuild Corp has displayed some fluctuations over the past five years, ranging from 2.01 to 2.60. The ratio measures the extent to which the company relies on debt financing as opposed to equity to fund its operations and growth.
A financial leverage ratio of 2.01 in 2023 indicates that the company's total assets are approximately twice its total equity. This suggests that TopBuild Corp has a moderate level of financial leverage, with a significant portion of its assets being funded through debt.
The ratio was higher in 2021 at 2.60, signaling a higher reliance on debt financing compared to equity. This could indicate increased financial risk for the company, as higher levels of debt may lead to higher interest expenses and repayment obligations, especially in times of economic uncertainty.
Conversely, the ratio decreased in 2022 and 2023, which could reflect the company's efforts to reduce its reliance on debt and improve its financial stability. However, it is important to note that a declining financial leverage ratio may also signify slower growth or limited investment opportunities due to lower leverage.
Overall, the trend in TopBuild Corp's financial leverage ratio shows variability over the years, highlighting the company's changing capital structure and strategic financial decisions in managing its debt levels and equity financing.