Commercial Metals Company (CMC)

Financial leverage ratio

		Aug 31, 2024	Aug 31, 2023	Aug 31, 2022	Aug 31, 2021	Aug 31, 2020
Total assets	US$ in thousands	6,817,840	6,639,090	6,237,030	4,638,670	4,081,730
Total stockholders’ equity	US$ in thousands	4,299,780	4,120,870	3,286,200	2,294,880	1,889,200
Financial leverage ratio		1.59	1.61	1.90	2.02	2.16

August 31, 2024 calculation

Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $6,817,840K ÷ $4,299,780K
= 1.59

The financial leverage ratio of Commercial Metals Company has shown a declining trend over the past five years, decreasing from 2.16 in August 2020 to 1.59 in August 2024. This indicates that the company has been reducing its reliance on debt to finance its operations and investments. A lower financial leverage ratio suggests a lower level of financial risk and greater financial stability, as the company is using less debt financing relative to its equity.

It is positive to see the declining trend in the financial leverage ratio as it signifies that Commercial Metals Company is managing its capital structure effectively by using less debt to fund its growth and operations. This reduction in leverage may enhance the company's ability to weather economic downturns and interest rate fluctuations.

Overall, the decreasing trend in the financial leverage ratio of Commercial Metals Company over the past five years reflects a prudent approach to capital structure management, which could contribute to the company's long-term financial health and stability.