Eaton Corporation PLC (ETN)
Financial leverage ratio
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Total assets | US$ in thousands | 38,381,000 | 39,236,000 | 39,381,000 | 38,535,000 | 38,432,000 | 37,289,000 | 36,773,000 | 35,517,000 | 35,030,000 | 34,364,000 | 35,153,000 | 35,208,000 | 34,027,000 | 34,128,000 | 36,804,000 | 34,080,000 | 31,824,000 | 30,985,000 | 30,348,000 | 30,845,000 |
| Total stockholders’ equity | US$ in thousands | 18,488,000 | 19,117,000 | 19,219,000 | 19,292,000 | 19,036,000 | 18,383,000 | 17,953,000 | 17,449,000 | 17,038,000 | 16,068,000 | 16,380,000 | 16,620,000 | 16,413,000 | 15,971,000 | 15,408,000 | 14,995,000 | 14,930,000 | 14,476,000 | 14,188,000 | 14,245,000 |
| Financial leverage ratio | 2.08 | 2.05 | 2.05 | 2.00 | 2.02 | 2.03 | 2.05 | 2.04 | 2.06 | 2.14 | 2.15 | 2.12 | 2.07 | 2.14 | 2.39 | 2.27 | 2.13 | 2.14 | 2.14 | 2.17 |
December 31, 2024 calculation
Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $38,381,000K ÷ $18,488,000K
= 2.08
The financial leverage ratio of Eaton Corporation PLC has been relatively stable over the past few years, hovering around the range of 2.00 to 2.39. The ratio indicates that, on average, the company has been using a moderate level of debt to finance its operations compared to its equity.
The downward trend observed in the financial leverage ratio from March 31, 2023, to December 31, 2024, could suggest that Eaton Corporation PLC has been gradually decreasing its reliance on debt financing. This may reflect a strategic shift towards a more conservative capital structure, possibly to reduce financial risk and enhance financial stability.
It is worth noting that a financial leverage ratio of around 2 indicates that the company has a balanced mix of debt and equity in its capital structure, which can help optimize its cost of capital and maximize shareholder returns. However, constant monitoring of this ratio is essential to ensure that the company maintains an appropriate level of leverage to support its growth and profitability objectives.
Peer comparison
Dec 31, 2024