Brady Corporation (BRC)
Financial leverage ratio
| Jul 31, 2024 | Jul 31, 2023 | Jul 31, 2022 | Jul 31, 2021 | Jul 31, 2020 | ||
|---|---|---|---|---|---|---|
| Total assets | US$ in thousands | 1,515,570 | 1,389,260 | 1,367,330 | 1,377,760 | 1,142,470 |
| Total stockholders’ equity | US$ in thousands | 1,066,660 | 990,919 | 911,298 | 963,028 | 752,112 |
| Financial leverage ratio | 1.42 | 1.40 | 1.50 | 1.43 | 1.52 |
July 31, 2024 calculation
Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $1,515,570K ÷ $1,066,660K
= 1.42
The financial leverage ratio for Brady Corporation has fluctuated over the past five years, ranging from 1.40 to 1.52. The ratio indicates that the company has been using debt to finance its operations and investments. A financial leverage ratio of above 1 suggests that the company has more debt than equity in its capital structure.
The decreasing trend in the ratio from 1.52 in 2020 to 1.42 in 2024 may indicate that the company has been gradually reducing its reliance on debt financing compared to equity. This could be a positive sign as lower leverage ratios indicate lower financial risk and potentially better financial stability.
However, it is important to note that a higher financial leverage ratio can also amplify returns on equity when the company is performing well, but it also increases the financial risk during economic downturns. Therefore, the company's management should carefully consider the optimal level of leverage to balance risk and return for the benefit of the company and its shareholders.
Peer comparison
Jul 31, 2024