ESAB Corp (ESAB)
Financial leverage ratio
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Total assets | US$ in thousands | 4,033,980 | 3,828,630 | 3,754,020 | 3,461,260 | 3,385,830 |
| Total stockholders’ equity | US$ in thousands | 1,769,000 | 1,607,400 | 1,350,210 | 2,460,740 | 2,502,630 |
| Financial leverage ratio | 2.28 | 2.38 | 2.78 | 1.41 | 1.35 |
December 31, 2024 calculation
Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $4,033,980K ÷ $1,769,000K
= 2.28
ESAB Corp's financial leverage ratio has exhibited an increasing trend over the years, with a ratio of 1.35 as of December 31, 2020, rising to 2.28 as of December 31, 2024. This indicates that the company's reliance on debt to finance its operations and assets has been intensifying. The significant jump in the financial leverage ratio from 2020 to 2022 suggests a notable increase in debt relative to equity during this period. While a higher leverage ratio can magnify returns on equity when profitability is strong, it also escalates financial risk, as higher debt levels entail higher interest payments and may increase vulnerability to economic downturns. ESAB Corp should carefully monitor its leverage ratio to ensure it remains sustainable and aligned with its long-term financial goals and risk tolerance.
Peer comparison
Dec 31, 2024