Cars.com Inc (CARS)

Financial leverage ratio

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Total assets	US$ in thousands	1,172,450	1,024,870	1,007,200	1,075,710	2,027,990
Total stockholders’ equity	US$ in thousands	492,108	384,430	398,020	368,190	1,141,070
Financial leverage ratio		2.38	2.67	2.53	2.92	1.78

December 31, 2023 calculation

Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $1,172,450K ÷ $492,108K
= 2.38

Cars.com's financial leverage ratio has exhibited some variability over the past five years. The trend shows a gradual increase from 1.78 in 2019 to 3.16 in 2020, followed by a decline to 2.74 in 2021 and further to 2.67 in 2022. However, in 2023, there was a slight increase in the ratio to 2.38.

The financial leverage ratio measures the extent to which a company relies on debt to finance its operations. A higher ratio indicates higher financial leverage, implying that the company has a higher level of debt relative to its equity. Conversely, a lower ratio suggests lesser reliance on debt financing.

The fluctuations in Cars.com's financial leverage ratio may indicate changes in the company's capital structure and financing decisions over the years. A decreasing trend in the ratio could imply a shift towards a more conservative capital structure, possibly involving a reduction in debt levels relative to equity. Conversely, an increasing trend could suggest a more aggressive use of debt to fuel growth or operations.

It is essential for investors and stakeholders to monitor changes in the financial leverage ratio, as high levels of leverage can increase financial risk and impact the company's ability to meet its obligations. Careful consideration of the company's overall financial health and risk tolerance is crucial when interpreting the implications of changes in the financial leverage ratio.