Donaldson Company Inc (DCI)
Financial leverage ratio
| Jul 31, 2024 | Jul 31, 2023 | Jul 31, 2022 | Jul 31, 2021 | Jul 31, 2020 | ||
|---|---|---|---|---|---|---|
| Total assets | US$ in thousands | 2,914,300 | 2,770,500 | 2,600,300 | 2,400,200 | 2,244,600 |
| Total stockholders’ equity | US$ in thousands | 1,489,100 | 1,320,700 | 1,133,200 | 1,137,100 | 992,900 |
| Financial leverage ratio | 1.96 | 2.10 | 2.29 | 2.11 | 2.26 |
July 31, 2024 calculation
Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $2,914,300K ÷ $1,489,100K
= 1.96
The financial leverage ratio for Donaldson Company Inc has exhibited some fluctuation over the past five years, ranging from 1.96 to 2.29. The ratio indicates the extent to which the company relies on debt to finance its operations and assets. A higher financial leverage ratio suggests a higher level of debt relative to equity in the company's capital structure.
In this case, the decreasing trend observed from 2.29 in 2022 to 1.96 in 2024 indicates a potential decrease in the company's reliance on debt financing compared to equity financing. This could imply improved financial stability and reduced financial risk for the company, as lower leverage generally indicates lower financial risk exposure.
However, it is essential to consider the optimal level of leverage for the company's specific industry and financial strategy. A balance between debt and equity financing is crucial to maintain a healthy capital structure and support sustainable growth and profitability in the long term. Further analysis and comparison with industry benchmarks would provide a more comprehensive understanding of Donaldson Company Inc's financial leverage position.