Badger Meter Inc (BMI)
Financial leverage ratio
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Total assets | US$ in thousands | 716,919 | 603,047 | 530,818 | 471,217 | 421,893 |
| Total stockholders’ equity | US$ in thousands | 516,482 | 442,422 | 403,070 | 361,259 | 331,068 |
| Financial leverage ratio | 1.39 | 1.36 | 1.32 | 1.30 | 1.27 |
December 31, 2023 calculation
Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $716,919K ÷ $516,482K
= 1.39
The financial leverage ratio of Badger Meter Inc. has been gradually increasing over the past five years, indicating a higher level of financial leverage. The ratio stood at 1.27 in 2019 and has been increasing steadily to reach 1.39 in 2023. This upward trend suggests that the company has been relying more on debt financing compared to equity financing to support its operations and growth.
A financial leverage ratio above 1 indicates that the company has more debt than equity in its capital structure. While leverage can amplify returns for shareholders in favorable economic conditions, it also increases financial risk, especially during economic downturns or times of high interest rates.
It is important for investors and stakeholders to monitor the financial leverage ratio of a company to assess its ability to meet its debt obligations and withstand financial challenges. A rising financial leverage ratio may signal a need for caution, as it could imply increasing financial risk and reduced financial flexibility for Badger Meter Inc.
Peer comparison
Dec 31, 2023