Quaker Chemical Corporation (KWR)
Financial leverage ratio
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Total assets | US$ in thousands | 2,714,210 | 2,821,620 | 2,955,760 | 2,891,830 | 2,850,320 |
| Total stockholders’ equity | US$ in thousands | 1,384,320 | 1,277,920 | 1,387,290 | 1,320,360 | 1,240,760 |
| Financial leverage ratio | 1.96 | 2.21 | 2.13 | 2.19 | 2.30 |
December 31, 2023 calculation
Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $2,714,210K ÷ $1,384,320K
= 1.96
The financial leverage ratio of Quaker Houghton has shown some fluctuations over the past five years. It decreased from 2.30 in 2019 to 2.19 in 2020, then increased to 2.13 in 2021, followed by another increase to 2.21 in 2022, and finally a decrease to 1.96 in 2023.
A higher financial leverage ratio indicates that the company relies more on debt financing to fund its operations and growth, which can magnify returns on equity but also increase financial risk. Conversely, a lower ratio implies less reliance on debt and potentially lower financial risk, but it may also limit the company's growth opportunities.
The decreasing trend in Quaker Houghton's financial leverage ratio from 2020 to 2023 suggests a shift towards a more conservative financing structure with reduced debt reliance. This may indicate a strategic effort to decrease financial risk and improve financial stability. However, the ratio should be assessed in conjunction with other financial metrics to fully evaluate the company's overall financial health and performance.
Peer comparison
Dec 31, 2023