Chart Industries Inc (GTLS)
Financial leverage ratio
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Total assets | US$ in thousands | 9,123,900 | 9,102,400 | 5,901,900 | 3,043,800 | 2,586,500 |
| Total stockholders’ equity | US$ in thousands | 2,828,800 | 2,786,500 | 2,684,300 | 1,625,200 | 1,591,300 |
| Financial leverage ratio | 3.23 | 3.27 | 2.20 | 1.87 | 1.63 |
December 31, 2024 calculation
Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $9,123,900K ÷ $2,828,800K
= 3.23
Chart Industries Inc's financial leverage ratio has been increasing steadily over the past five years, from 1.63 at the end of 2020 to 3.23 at the end of 2024. This indicates that the company's reliance on debt to finance its operations and growth has been growing significantly over the period.
A financial leverage ratio of 1 implies that the company has an equal amount of equity and debt in its capital structure. As the ratio increases beyond 1, it suggests that the company is taking on more debt relative to its equity, which can potentially magnify returns but also increase financial risk.
The uptrend in the financial leverage ratio for Chart Industries Inc may indicate a strategy to fuel expansion or capitalize on investment opportunities through debt financing. However, a higher leverage ratio also implies greater obligations to creditors, increased interest expense, and heightened risk of financial distress, especially in times of economic uncertainty or interest rate fluctuations.
Investors and stakeholders should closely monitor the company's debt levels and debt management strategies to assess its ability to meet financial obligations and sustain long-term growth while balancing financial risk.