Quest Diagnostics Incorporated (DGX)
Financial leverage ratio
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Total assets | US$ in thousands | 14,022,000 | 12,837,000 | 13,611,000 | 14,026,000 | 12,843,000 |
| Total stockholders’ equity | US$ in thousands | 6,307,000 | 5,893,000 | 6,444,000 | 6,759,000 | 5,641,000 |
| Financial leverage ratio | 2.22 | 2.18 | 2.11 | 2.08 | 2.28 |
December 31, 2023 calculation
Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $14,022,000K ÷ $6,307,000K
= 2.22
The financial leverage ratio of Quest Diagnostics, Inc. has shown a general increasing trend over the past five years, rising from 2.28 in 2019 to 2.22 in 2023. This indicates that the company's reliance on debt to finance its operations and activities has been gradually increasing.
A financial leverage ratio above 1 suggests that the company is using more debt financing than equity financing, which can amplify returns on equity when profitability is high. However, it also increases the financial risk as the company has higher interest payments and debt obligations to meet.
The steady rise in the financial leverage ratio over the years may indicate that Quest Diagnostics, Inc. has been actively leveraging its capital structure to support growth initiatives or business expansion. It is essential for investors and stakeholders to closely monitor this trend to assess the company's ability to manage its debt levels effectively and mitigate associated risks.
Peer comparison
Dec 31, 2023