Illinois Tool Works Inc (ITW)
Financial leverage ratio
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Total assets | US$ in thousands | 15,518,000 | 15,422,000 | 16,077,000 | 15,612,000 | 15,068,000 |
| Total stockholders’ equity | US$ in thousands | 3,012,000 | 3,088,000 | 3,625,000 | 3,181,000 | 3,026,000 |
| Financial leverage ratio | 5.15 | 4.99 | 4.44 | 4.91 | 4.98 |
December 31, 2023 calculation
Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $15,518,000K ÷ $3,012,000K
= 5.15
The financial leverage ratio of Illinois Tool Works, Inc. has exhibited fluctuations over the past five years. In 2023, the ratio increased to 5.15 from 4.99 in 2022, indicating that the company relied more on debt to finance its operations compared to the previous year. This higher financial leverage suggests a potentially increased risk due to higher debt levels relative to equity.
In 2021, the ratio decreased to 4.44, indicating a decrease in the company's reliance on debt financing. However, this was followed by an increase to 4.91 in 2020 and 4.98 in 2019, suggesting a slight increase in leverage during those years. Overall, the trend in the financial leverage ratio appears to have been somewhat volatile, with fluctuations noted from year to year.
It is important for investors and stakeholders to closely monitor the financial leverage ratio of the company as excessively high leverage levels can indicate financial distress and increased risk, while too low of a ratio may signal underutilization of debt for potential growth opportunities.
Peer comparison
Dec 31, 2023