Illinois Tool Works Inc (ITW)

Financial leverage ratio

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Total assets	US$ in thousands	13,692,000	15,518,000	15,422,000	16,077,000	15,612,000
Total stockholders’ equity	US$ in thousands	3,317,000	3,012,000	3,088,000	3,625,000	3,181,000
Financial leverage ratio		4.13	5.15	4.99	4.44	4.91

December 31, 2024 calculation

Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $13,692,000K ÷ $3,317,000K
= 4.13

The financial leverage ratio for Illinois Tool Works Inc has shown some fluctuation over the past five years. As of December 31, 2020, the ratio stood at 4.91, indicating that the company's level of debt relative to its equity was moderately high.

Subsequently, there was a slight decrease in the financial leverage ratio to 4.44 as of December 31, 2021, suggesting a potential improvement in the company's debt management. However, by December 31, 2022, the ratio increased to 4.99, surpassing the previous peak and signifying a higher reliance on debt financing.

The trend continued with a further rise in the financial leverage ratio to 5.15 by December 31, 2023, which may raise concerns about the company's increased financial risk and leverage. Nonetheless, there was a notable decrease to 4.13 as of December 31, 2024, indicating a potential effort to reduce debt levels or increase equity in the capital structure.

Overall, the trend in the financial leverage ratio for Illinois Tool Works Inc highlights fluctuations in the company's capital structure and debt management practices over the specified period. Monitoring such variations is crucial for investors and stakeholders to assess the company's risk profile and financial health.