Eaton Corporation PLC (ETN)
Financial leverage ratio
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Total assets | US$ in thousands | 38,432,000 | 35,014,000 | 34,027,000 | 31,824,000 | 32,805,000 |
| Total stockholders’ equity | US$ in thousands | 19,036,000 | 17,038,000 | 16,413,000 | 14,930,000 | 16,082,000 |
| Financial leverage ratio | 2.02 | 2.06 | 2.07 | 2.13 | 2.04 |
December 31, 2023 calculation
Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $38,432,000K ÷ $19,036,000K
= 2.02
The financial leverage ratio of Eaton Corporation plc has exhibited a fluctuating trend over the past five years, ranging from 2.02 to 2.13. This ratio indicates that the company has been relying more on debt financing to support its operations, with a higher financial leverage indicating a higher proportion of debt in its capital structure compared to equity.
The decrease in the financial leverage ratio from 2.13 in 2020 to 2.02 in 2023 suggests a potential shift towards a more balanced capital structure with a lower reliance on debt. However, it is important to note that a financial leverage ratio above 1 signifies that the company has more debt than equity, which can amplify both returns and risks for shareholders.
Overall, further analysis of Eaton Corporation plc's debt levels, profitability, and cash flow generation would be beneficial in gaining a comprehensive understanding of the company's financial health and ability to meet its debt obligations in the long term.
Peer comparison
Dec 31, 2023