The Cooper Companies Inc. (COO)
Financial leverage ratio
| Oct 31, 2023 | Oct 31, 2022 | Oct 31, 2021 | Oct 31, 2020 | Oct 31, 2019 | ||
|---|---|---|---|---|---|---|
| Total assets | US$ in thousands | 11,658,900 | 11,492,300 | 9,606,200 | 6,737,500 | 6,274,500 |
| Total stockholders’ equity | US$ in thousands | 7,550,800 | 7,174,500 | 6,941,800 | 3,824,600 | 3,628,400 |
| Financial leverage ratio | 1.54 | 1.60 | 1.38 | 1.76 | 1.73 |
October 31, 2023 calculation
Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $11,658,900K ÷ $7,550,800K
= 1.54
The financial leverage ratio, also known as the debt-to-equity ratio, measures the proportion of a company's financing that comes from debt compared to equity. A higher ratio indicates higher financial risk, as it signifies that the company is funding its operations and growth primarily through borrowing. Let's analyze Cooper Companies, Inc.'s financial leverage ratio over the past five years to understand its capital structure and financial risk.
In 2023, the financial leverage ratio decreased to 1.54 from 1.60 in 2022. This indicates that the company reduced its financial leverage compared to the prior year. A decreasing leverage ratio suggests a lower reliance on debt financing and a stronger equity position. It may indicate better financial stability and less risk of financial distress.
In 2021, the financial leverage ratio increased to 1.38 from 1.76 in 2020. This significant decrease in leverage ratio suggests a shift towards a more equity-funded capital structure. The reduction in leverage may signify a deliberate effort to lower financial risk and enhance financial stability. However, it's important to note that a very low leverage ratio could also mean missed opportunities for growth due to underutilization of debt financing.
In 2019, the financial leverage ratio was 1.73, indicating a moderate level of leverage. However, it's essential to consider the industry benchmarks and peer comparisons to make meaningful assessments of the company's capital structure and financial risk.
In summary, the trend in Cooper Companies, Inc.'s financial leverage ratio indicates fluctuations in its capital structure and financing decisions. The company has demonstrated the ability to adjust its leverage over the years, potentially reflecting strategic efforts to manage financial risk and optimize its capital mix. However, further analysis, including the examination of interest coverage and debt maturity, is needed to fully assess the implications of these changes in the financial leverage ratio.
Peer comparison
Oct 31, 2023