Innovex International, Inc (INVX)

Financial leverage ratio

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Total assets	US$ in thousands	1,197,480	1,028,180	436,286	284,895	1,151,170
Total stockholders’ equity	US$ in thousands	958,156	328,921	251,280	180,551	1,041,530
Financial leverage ratio		1.25	3.13	1.74	1.58	1.11

December 31, 2024 calculation

Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $1,197,480K ÷ $958,156K
= 1.25

The financial leverage ratio of Innovex International, Inc. exhibits significant fluctuation over the five-year period from December 31, 2020, to December 31, 2024. At the end of 2020, the ratio stood at 1.11, indicating a relatively modest level of debt relative to equity. This suggests that the company was predominantly financed through shareholders' equity, reflecting a conservative leverage stance at that time.

In 2021, the ratio increased substantially to 1.58, signifying an augmentation in leverage and implying that Innovex began to utilize more debt in the capital structure. This trend continued into 2022, with the ratio further rising to 1.74, which indicates an even higher reliance on borrowed funds relative to equity.

The most notable change occurred between 2022 and 2023, where the ratio surged from 1.74 to 3.13. This sharp escalation indicates a significant increase in financial leverage, potentially suggesting that the company financed substantial expansion, investments, or possibly refinanced existing obligations during this period. Such a high leverage ratio increases the financial risk, as the company bears a greater burden of fixed interest payments relative to its equity base.

However, in 2024, the ratio declined markedly to 1.25. This reduction indicates a partial deleveraging process, either through debt repayment, equity issuance, or a combination of both. While still higher than the 2020 level, the ratio suggests a reduction in financial risk relative to the peak observed in 2023.

Overall, the company's financial leverage ratio demonstrates considerable volatility over this period, highlighting changes in debt levels and capital structure management strategies. The sharp peak in 2023 on the back of rapid leverage increase may reflect aggressive growth financing, while the subsequent decrease points towards a strategic effort to restore a more balanced financial leverage position.