J & J Snack Foods Corp (JJSF)
Financial leverage ratio
| Sep 30, 2024 | Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | ||
|---|---|---|---|---|---|---|
| Total assets | US$ in thousands | 1,365,100 | 1,277,240 | 1,216,970 | 1,122,220 | 1,056,550 |
| Total stockholders’ equity | US$ in thousands | 956,970 | 911,518 | 863,169 | 845,654 | 809,498 |
| Financial leverage ratio | 1.43 | 1.40 | 1.41 | 1.33 | 1.31 |
September 30, 2024 calculation
Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $1,365,100K ÷ $956,970K
= 1.43
The financial leverage ratio of J & J Snack Foods Corp has shown a gradually increasing trend over the past five years. The ratio was 1.31 in 2020 and has increased to 1.43 in 2024. This indicates that the company's reliance on debt financing has been growing steadily over the period.
A financial leverage ratio above 1 suggests that the company has more debt than equity in its capital structure. In this case, the ratio has consistently been above 1, indicating that J & J Snack Foods Corp has been using more debt to finance its operations than equity.
While a higher financial leverage ratio can amplify returns for shareholders during favorable economic conditions, it also increases the company's financial risk, as higher debt levels mean higher interest payments and potentially tighter cash flow management.
It is important for investors and analysts to closely monitor the trend of the financial leverage ratio to assess the company's ability to meet its debt obligations and manage financial risk effectively.