Badger Meter Inc (BMI)
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 | 716,919 | 689,757 | 659,252 | 633,403 | 603,047 | 574,373 | 560,031 | 545,938 | 530,818 | 519,027 | 499,016 | 486,295 | 471,217 | 448,636 | 439,533 | 430,956 | 421,893 | 417,490 | 404,861 | 403,249 |
| Total stockholders’ equity | US$ in thousands | 516,482 | 492,706 | 475,592 | 458,037 | 442,422 | 422,859 | 416,183 | 409,881 | 403,070 | 391,824 | 381,847 | 369,849 | 361,259 | 351,543 | 341,143 | 335,721 | 331,068 | 323,639 | 316,452 | 308,613 |
| Financial leverage ratio | 1.39 | 1.40 | 1.39 | 1.38 | 1.36 | 1.36 | 1.35 | 1.33 | 1.32 | 1.32 | 1.31 | 1.31 | 1.30 | 1.28 | 1.29 | 1.28 | 1.27 | 1.29 | 1.28 | 1.31 |
December 31, 2023 calculation
Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $716,919K ÷ $516,482K
= 1.39
The financial leverage ratio measures the extent to which a company relies on debt to finance its operations and growth. In the case of Badger Meter Inc., the financial leverage ratio has been relatively stable over the past eight quarters, ranging from 1.33 to 1.40.
A financial leverage ratio above 1 indicates that the company has more debt than equity in its capital structure. Badger Meter Inc. has consistently maintained a ratio above 1, suggesting that it is more leveraged and relies more heavily on debt financing compared to equity financing.
The incremental increase in the ratio from 1.33 in Q1 2022 to 1.40 in Q3 2023 indicates a slight uptrend in the company's leverage over time. This could be a deliberate strategic decision by the company to take advantage of lower borrowing costs or to fuel growth opportunities through debt financing.
It's important to note that while higher leverage can amplify returns on equity when business is booming, it also increases the company's financial risk, as higher debt levels could lead to financial distress in times of economic downturns or disruptions in the capital markets.
Overall, Badger Meter Inc.'s consistent maintenance of a financial leverage ratio above 1 signifies its reliance on debt to support its operations and growth initiatives, and investors should carefully monitor the company's ability to manage its debt levels effectively to mitigate potential risks associated with higher leverage.
Peer comparison
Dec 31, 2023