Genuine Parts Co (GPC)
Financial leverage ratio
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Total assets | US$ in thousands | 17,968,500 | 16,495,400 | 14,352,100 | 13,440,200 | 14,645,600 |
| Total stockholders’ equity | US$ in thousands | 4,401,050 | 3,790,360 | 3,490,740 | 3,204,800 | 3,674,710 |
| Financial leverage ratio | 4.08 | 4.35 | 4.11 | 4.19 | 3.99 |
December 31, 2023 calculation
Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $17,968,500K ÷ $4,401,050K
= 4.08
The financial leverage ratio of Genuine Parts Co. has exhibited fluctuations over the past five years, ranging from 3.99 in 2019 to 4.35 in 2022. This ratio indicates that, on average, the company has been utilizing a higher level of debt in its capital structure compared to equity to finance its operations and investments. The trend in the financial leverage ratio suggests some variability in the company's capital structure decisions.
A financial leverage ratio of 4.08 in 2023 signifies that for every $1 of equity, Genuine Parts Co. has approximately $4.08 of debt. This level of leverage indicates a substantial reliance on debt financing, which can potentially amplify both returns and risks for the company. It is important for stakeholders to closely monitor changes in the financial leverage ratio over time to assess the company's ability to meet its debt obligations and sustain its operations effectively.