WW Grainger Inc (GWW)
Financial leverage ratio
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Total assets | US$ in thousands | 8,147,000 | 7,588,000 | 6,592,000 | 6,295,000 | 6,005,000 |
| Total stockholders’ equity | US$ in thousands | 3,115,000 | 2,440,000 | 1,874,000 | 1,828,000 | 1,855,000 |
| Financial leverage ratio | 2.62 | 3.11 | 3.52 | 3.44 | 3.24 |
December 31, 2023 calculation
Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $8,147,000K ÷ $3,115,000K
= 2.62
The financial leverage ratio of W.W. Grainger Inc. has shown a decreasing trend from 3.52 in 2021 to 2.62 in 2023. This indicates that the company has been reducing its reliance on debt to finance its operations and investments over the years. A lower financial leverage ratio implies a lower level of financial risk for the company, as it is relying less on borrowed funds to support its assets.
By decreasing its financial leverage ratio, W.W. Grainger Inc. may have improved its financial stability and flexibility, as it may have reduced the potential impact of interest rate fluctuations or debt repayment obligations on its profitability and cash flows. Additionally, a lower financial leverage ratio may be viewed positively by investors and creditors, as it suggests a stronger financial position and lower risk of default.
Overall, the decreasing trend in W.W. Grainger Inc.'s financial leverage ratio indicates a strategic shift towards a more conservative capital structure, which could help enhance the company's financial health and resilience in the long run.