Keysight Technologies Inc (KEYS)
Financial leverage ratio
| Oct 31, 2023 | Oct 31, 2022 | Oct 31, 2021 | Oct 31, 2020 | Oct 31, 2019 | ||
|---|---|---|---|---|---|---|
| Total assets | US$ in thousands | 8,683,000 | 8,098,000 | 7,781,000 | 7,218,000 | 6,623,000 |
| Total stockholders’ equity | US$ in thousands | 4,654,000 | 4,161,000 | 3,784,000 | 3,297,000 | 3,004,000 |
| Financial leverage ratio | 1.87 | 1.95 | 2.06 | 2.19 | 2.20 |
October 31, 2023 calculation
Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $8,683,000K ÷ $4,654,000K
= 1.87
The financial leverage ratio, also known as the equity multiplier, measures the extent to which a company uses debt to finance its assets. A higher financial leverage ratio indicates higher financial risk, as it suggests that the company is relying more on debt to fund its operations and investments.
Keysight Technologies Inc's financial leverage ratio has shown a declining trend over the past five years, decreasing from 2.20 in 2019 to 1.87 in 2023. This indicates that the company has been reducing its reliance on debt to finance its operations and investments, which could lead to lower financial risk in the long term.
A decreasing financial leverage ratio may signify that the company is using more equity to finance its assets, which could potentially enhance its financial stability and reduce the impact of interest rate fluctuations on its profitability.
However, it's important to note that a declining financial leverage ratio may also suggest that the company's growth opportunities are limited by its internal financing capabilities and could potentially indicate underutilization of debt in a low interest rate environment. Therefore, it is essential to consider the overall financial strategy and market conditions when interpreting changes in the financial leverage ratio.
In summary, Keysight Technologies Inc's decreasing financial leverage ratio suggests a lower reliance on debt to finance its assets, potentially reducing financial risk and improving long-term stability, though the company's strategic and market-specific considerations should be taken into account for a comprehensive assessment.
Peer comparison
Oct 31, 2023