Hubbell Inc (HUBB)

Financial leverage ratio

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Total assets	US$ in thousands	6,914,000	5,402,600	5,281,500	5,085,100	4,903,000
Total stockholders’ equity	US$ in thousands	2,877,000	2,360,900	2,229,800	2,070,000	1,947,100
Financial leverage ratio		2.40	2.29	2.37	2.46	2.52

December 31, 2023 calculation

Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $6,914,000K ÷ $2,877,000K
= 2.40

The financial leverage ratio measures the extent to which a company is using debt to finance its operations and growth. A higher financial leverage ratio indicates that a company is relying more on debt financing, which can increase the riskiness of its financial structure.

In the case of Hubbell Inc., the financial leverage ratio has fluctuated over the past five years. In 2023, the ratio stood at 2.40, which was higher compared to the previous year. This suggests that Hubbell Inc. increased its reliance on debt to support its activities in 2023.

Despite the increase in 2023, the financial leverage ratio for the company has generally been declining since 2019 when it was at its highest level of 2.52. This trend indicates that Hubbell Inc. has been gradually reducing its debt levels relative to its equity over the years.

It is important to note that while a moderate level of financial leverage can enhance returns for shareholders, excessive leverage can magnify financial risks, especially in times of economic uncertainty. Therefore, investors and stakeholders should closely monitor Hubbell Inc.'s financial leverage ratio and its trend over time to assess the company's financial health and risk profile.