Lithia Motors Inc (LAD)

Financial leverage ratio

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Total assets	US$ in thousands	19,632,500	15,006,600	11,146,900	7,902,100	6,083,900
Total stockholders’ equity	US$ in thousands	6,213,900	5,206,200	4,626,400	2,661,500	1,467,700
Financial leverage ratio		3.16	2.88	2.41	2.97	4.15

December 31, 2023 calculation

Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $19,632,500K ÷ $6,213,900K
= 3.16

The financial leverage ratio of Lithia Motors, Inc. has fluctuated over the past five years. In 2023, the ratio stood at 3.16, representing an increase from the previous year's ratio of 2.88. This indicates that the company's reliance on debt to finance its operations and assets has increased, potentially raising concerns about its financial risk.

Comparing to 2021, when the financial leverage ratio was 2.41, the recent increase suggests a higher level of debt relative to equity in the capital structure. However, the ratio in 2020 was higher at 2.97, potentially signaling further fluctuations in the company's capital structure management.

The financial leverage ratio of 4.15 in 2019 was the highest among the years presented, indicating a significant reliance on debt at that time. Overall, the variations in the financial leverage ratio suggest that Lithia Motors has undergone changes in its capital structure and funding sources in recent years, potentially impacting its financial risk and stability.