KAR Auction Services Inc (KAR)

Financial leverage ratio

Dec 31, 2024 Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020
Total assets US$ in thousands 4,622,300 4,625,800 4,617,800 4,818,400 4,726,300 4,729,300 4,897,400 5,147,900 5,119,800 5,301,300 6,126,000 7,792,400 7,417,200 7,170,200 7,118,300 7,160,200 6,798,200 6,909,900 6,494,000 5,999,700
Total stockholders’ equity US$ in thousands 1,996,400 1,327,100 1,940,700 1,942,700 1,939,500 1,918,100 1,946,900 2,138,400 2,130,800 2,146,900 612,500 2,117,500 2,103,900 2,063,100 2,071,300 2,147,300 2,165,600 2,147,000 2,082,700 1,571,800
Financial leverage ratio 2.32 3.49 2.38 2.48 2.44 2.47 2.52 2.41 2.40 2.47 10.00 3.68 3.53 3.48 3.44 3.33 3.14 3.22 3.12 3.82

December 31, 2024 calculation

Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $4,622,300K ÷ $1,996,400K
= 2.32

The financial leverage ratio measures the extent to which a company is using debt to finance its operations. A higher ratio indicates higher financial risk due to higher debt levels.

Analyzing KAR Auction Services Inc's financial leverage ratio over the given periods shows fluctuations in the company's leverage position. The ratio was relatively stable around 3 to 3.5 from March 2020 to June 2022. However, in June 2022, the ratio spiked significantly to 10, indicating a substantial increase in debt relative to equity. This sudden spike could raise concerns about the company's financial stability and risk profile.

Subsequently, from September 2022 to December 2024, the financial leverage ratio decreased steadily, reaching a low of 2.32 by December 2024. This downward trend suggests the company made efforts to reduce its debt levels or increase its equity base, improving its financial position and reducing risk.

Overall, while the financial leverage ratio for KAR Auction Services Inc experienced fluctuations during the period under review, the company managed to bring it down to a more stable level by the end of 2024. Investors and stakeholders should monitor the company's leverage levels to assess its financial health and risk profile.