Kennametal Inc (KMT)
Financial leverage ratio
| Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | ||
|---|---|---|---|---|---|---|
| Total assets | US$ in thousands | 2,503,760 | 2,547,230 | 2,573,520 | 2,665,760 | 3,037,590 |
| Total stockholders’ equity | US$ in thousands | 1,249,880 | 1,275,450 | 1,252,580 | 1,329,610 | 1,229,880 |
| Financial leverage ratio | 2.00 | 2.00 | 2.05 | 2.00 | 2.47 |
June 30, 2024 calculation
Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $2,503,760K ÷ $1,249,880K
= 2.00
The financial leverage ratio of Kennametal Inc has remained relatively stable over the past five years, ranging between 2.00 and 2.47. This ratio indicates that Kennametal has been utilizing debt to finance its operations and investments. A ratio of 2.00 suggests that for every dollar of equity, Kennametal has $2.00 of debt.
The decrease in the financial leverage ratio from 2.47 in 2020 to 2.00 in 2024 may indicate that Kennametal has been managing its debt levels more effectively, possibly by reducing its reliance on debt financing or by increasing its equity base. A lower financial leverage ratio generally signifies lower financial risk as the company has less debt in its capital structure compared to equity.
Overall, the stability and slight decrease in the financial leverage ratio of Kennametal Inc suggest a prudent approach to managing its capital structure and financial risk over the years. Further analysis of the company's debt management strategies and overall financial health would provide a more comprehensive understanding of its leverage position.